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
Well well well. The bears are not dead. For the 6th consecutive session, the bears have won the morning and lost the rest of the session. That said, the bears have put together a bit of a close-to-close winning streak. It’s not like they’re about to crash the tape but it is a very different dynamic than at any time in the past year. Maybe change is afoot. Or maybe the bulls are just going to ramp up the tape and rip their heads off for the umpteenth time.
We shall see.
Here’s a picture of the last 6 sessions. Notice that each morning reflected weakness. The dip-buyers always moved in and turned the tape – never all the way though.
It’s easy to think that this is a US phenomenon – our bulls fighting our bears. That is not the case however. The morning weakness we’ve seen lately is because of overseas weakness. Europe printed 8 consecutive down days and Japan printed 6. Our market has strengthened during the end of trading in Europe.
Only today did our tape droop again later in the session.
My point here is simply that the US market is reacting to the rest of the world, not leading it. Maybe that weakness eventually changes our dynamic over here but for the moment, we are going however Japan and Europe goes.
Bullish sentiment has been bulletproof for the past 1-2 years. Valuations have stretched as a result. We are at a moment in the market where sentiment is up for grabs. If it goes south, the tape has no good fundamental support for a while. If the bulls re-possess the narrative, we could rally 5% in a heartbeat.
There’s no news around the corner that will tilt this battle. It’s all about the emotions of the investors right now.
And the emotions that matter most are those of the Asian and European investors.
See you tomorrow,