The Zigmont Report (Recap for 5/20/19)

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.

Nerves frazzled.  Asian markets were mixed overnight but Europe was off modestly.  Our premarket futures were down 20-plus handles because of the usual catch-all reason: trade worries.  Tension with Iran was a new twist on that old saw this time.  There was an interesting back-and-forth to the session also.

The initial nervousness triggered a down open.  The S&P open down about 20 handles and quickly dropped to down about 25.  At that point dip-buyers decided that their time had come.  The market climbed until the European close and printed the intraday highs, the S&P was off 6 handles about then.  US equities wandered around, losing steam, until 2:30 PM.  At that point equities dropped to the intraday lows, which were about the same as in early trading.  We bounced during the final 45 minutes and closed with a modest loss on the session.  Capital flow was light and uninteresting at 92%.

So the market fell, rallied, fell again, and repaired some of the damage…on light flow, without much news.

Investors continue to shape their emotions by the last 15 minutes of tick-by-tick trading.  Every so often, the tape reverses and the emotions swing in the other direction.  It’s a big blender but investors still try to learn something from meaningless randomness.

We’re still waiting for meaningful news.

Until then, we’re dealing with a market that still struggles to deal with multiple risks.  Trade with China continues to be viewed as the one-and-only risk out there.  That’s not the case but the market remains fixated.  A news event will change that but until then we’ll be swinging on empty speculations.

See you tomorrow.