The Zigmont Report (Daily Market Recap for 10/23/17)

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

The quietest dip.  The morning began like almost every morning this year.  The news overseas was completely uninteresting and the overseas markets were higher and our futures markets were higher.  Capital flow today was 100%.

Situation normal.

Nine S&P 500 stocks reported before the open and eight of them beat.  Three closed higher, six closed lower.

Situation normal.

The S&P opened higher but weakened slowly and calmly over the course of the day.

Not normal.

Today is not a vindication for the bears.  It’s not even the start of vindication for the bears.  It’s a perplexingly overdue down day – a small one at that.  That’s all that today represents.

We all know what dip-buyers do and I’m curious to see how they respond tomorrow.  I am waiting for two major changes in the environment before I suspect that the underlying trend of the market has shifted:

  1. The earnings growth narrative has to take a hit
  2. The buy-the-dip reflex has to break

Until one of these major changes occurs, I think we’re in the same market as last week, last month, last year.

I certainly wouldn’t go long to play today’s dip but this is not the time to think that the bull is done either.  The earnings season is about to get very busy.  Let’s just see how it rolls out.

See you tomorrow,