The Zigmont Report (Recap for 5/23/19)

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.

Typical mini-scare.  Today was for the bears.  Worry started in Asian markets and spread across the globe to ours.  We were looking at a 25 handle drop according to premarket futures and we got that.  And then things got worse in a hurry.  The S&P fell fairly consistently until lunch was over.  The S&P was down around 50 handles then.  We bounced around until the last hour of trading and it looks like dip-buyers or short-coverers did their thing.  The S&P lifted 15-plus handles and we finished nicely off the bottom.

The session ended up being bad, instead of really bad, as a result of that pop.  Capital flow was 109%.  This was very unusual.  We experienced a substantial risk-off day in all markets.  Equities dropped materially and treasuries rallied like crazy and oil fell a ton.  The point here is that US equity volume was just a tiny bit elevated even though all major markets made big moves.  I don’t know what it means, if anything, but it’s weird for bonds to move a lot and equities to move a lot, but not on big volume.

Anyway, let’s get back to the US equity market.  We got a bit of a scare today.  It was, of course, rooted in US/China trade issues.  The bits of info that bubbled out today suggested a bumpy negotiation.  There were no big news items or headlines but for whatever (unknown) reasons, investors got the willies today.  Maybe it was the straw that broke the camel’s back.

I’m still of the mind that we have been experiencing investor confusion.  We have heightened anxiety out there in investorland but no good information.  As a result, the crowd swings pretty wildly.

I thought we might be in a no news/no moves environment.  That’s not the case.  Nerves are refrazzled and we’re dealing with raw emotions again.

Hold on to your hats.  I still don’t think there’s a trend at work out there but the gyrations are amped up again.

See you tomorrow.