The Zigmont Report (Recap for 4/11/19)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $10B AUM, offering volatility management solutions to its investor base worldwide.  Mike has been publishing his daily newsletter (Monday-Friday) privately for the firm’s investors and his personal contacts in the investment business since 2008, sending it daily shortly after the market close.

The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC.

Another snoozer.  We’ve treaded water, essentially, for a while and earnings season is about to open.  JP Morgan kicks the season off tomorrow morning along with three other financials: WFC, FRC, PNC.  JPM and PNC traded higher today.  WFC was about flat.  FRC was down.  Does that tell us how the market is leaning?  It’s not obvious to me if it is.  Total capital flow for the market was light again at 81% so even if speculators are expressing a view on the entire earnings season today, they were doing it was very little capital.

As it stands, earnings season is the next big event for US equities.  The results aren’t expected to dazzle so the narrative of the season will emerge from the guidance given.  I’m sure the financial talking heads will be working to spin things positively but we’ll have to see if the price-action goes along with that or not.

As anticipated as earnings season is, we’re only getting a peek into the financial space tomorrow.  There will be broader market extrapolation but I don’t think too much.

The bulk of the rally this year has been rooted in sentiment.  The go-go optimism appears to have sputtered out.  If the rally is going to re-engage in the short run, it’ll be from an injection of optimism from tomorrow’s guidance.  I don’t think whatever the market does will have legs though because we still need to hear from other sectors to flesh out a true earnings season narrative.  That usually takes a couple of weeks.

In the meantime, we’re dancing with the financials.  See you tomorrow.