The Zigmont Report (Daily Market Recap for 11/20/17)

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

Looking quiet.  It’s Thanksgiving week and it should get very quiet as the week rolls along.  Today was a pretty uneventful day to start things off.  Capital flow was light at 94% and the tape lifted gently over the entire session.  It appears to be a response to Friday’s drop.  This back and forth is tame but I think both camps are digging in and defending certain technical levels.

Fundamental news today was light although the leading indicators index (1.2% vs 0.8% est & 0.1% prior revised from -0.2%) surprised strongly to the upside.  This is a forward-looking index which attempts to measure optimism and anticipated economic activity/conditions.  It’s notoriously noisy so markets tend to ignore it.  October’s data was the highest number since Nov ’13, by the way.  It confirms what we already know: the economy is improving and outlooks are brightening.

That’s been a keystone of the bullish narrative for more than a year though so there’s nothing to see here.

If there’s anything else worth mentioning it was rumors in the afternoon that the Justice Department was going to block the AT&T / Time Warner merger.  I can’t comment on the details of what’s going on here but I can say that when the rumors broke, both stocks sank and the broader market dipped in sympathy.

It’s likely that investors are viewing the M&A space as shrinking and D.C. as an obstacle to these transactions.  That’s not going to crack the tape and trigger a bearish trend but it’s a splash of cold water.

That’s about that with respect to today.  Let’s take a final look at the earnings season though.

2017 Q3 Earnings season:

91% of the S&P 500 reporting (+18% vs 11/2 data)

Surprise vs Estimates

  • Sales: +0.8% (unch vs 11/2 data)
  • Earnings: +4.5% (-0.5% vs 11/2 data)

Growth vs Prior (Y/Y)

  • Sales: +5.3% (-0.3% vs 11/2 data)
  • Earnings: +6.1% (-1.4% vs 11/2 data)

Some negative shifts since early November but nothing crazy.  The growth numbers are OK.  Not great, not horrible.  Limbo numbers.

See you tomorrow,