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
We got ourselves a fight. It’s not a very exciting fight but the bulls and the bears are going after each other. The bears decided to counter yesterday’s rally and send a message to the dip-buyers that they’re not going to roll over like usual. This is some interesting drama – especially since the last year has been so boring and one-sided.
There was no news to trigger this drama. There’s no evident cause to point to. There’s no satisfying answer to the questions “why now?” and “why here?
Sentiment is up for grabs still. The interesting item of day is simply that the bears didn’t throw in the towel. A 20 point S&P rally after a dip used to send the bears into hiding. Not today. Today the sellers re-sold.
Buy-the-dip isn’t about to go away after one dip. That behavior is going to stick around through thick and thin. If the market is actually going to pause, or even decline, it’s going to be due to stubbornness of the sellers.
I don’t know if they have the chops to tell you the truth. I’m a valuation bear. I’m with them, mind you. But they have been so clobbered for so long, I wonder if they can win a war of attrition…which is what’s necessary to turn the tape.
A major news item could always tilt the investing landscape in one camps favor or the other but good luck predicting that.
I’m just trying to say that the bears are the underdogs. They haven’t folded like they used to though. That’s different.
See you Monday, have a great weekend,