The Zigmont Report (Daily Market Recap for 12/15/17)

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

Tax reform.  Apparently it is in the bag….again.  Rubio stated he was a yes again and markets rallied strongly.  The actual vote is next week and I wonder what the tape will do when the law gets passed?  It seems like the headline “tax-reform-is-going-to-pass” has occurred about 10 different times in the last 3 weeks with each instance driving the S&P 10-20 handles higher.  Hmmm.

Janet Yellen admitted, in her press conference on Wednesday, that the voting members of the FOMC have been assuming tax reform passage for some time and they’ve baked that into their numbers for a while.  Why is the equity market repricing this news, as if it’s a revelation, every other day?  I don’t know.

Maybe today’s rally is just momentum and we’re attributing it to the only headline we see?

The bulls have tortured the bears yet again with today’s action.  By my count this makes the score about 500-0.  Anyway, the S&P declined for 2 sessions and 11 points… only to have the dip-buyers jump in with a vengeance and put in new all-time highs today.  I wonder if there are any bears left in the world?

If there are, I wonder if they have any money left?

We remain in an incredible bull market obviously.  It’s almost 9 years old and it’s delivered 19.3% annualized return along the way… and it’s been impervious to downswings.  How much longer can it go?

It’s foolish to set an arbitrary time horizon.  So we can’t use age.

It’s foolish to set an arbitrary valuation.  So we can’t use price.

Macro data looks positive and, more importantly, stable.  So we can’t anticipate a recession.

What are we left with?

Price trend.

So it won’t end until it ends.
So unsatisfying.
So dangerous.

So throw out everything you think you know about the equity market, pick your favorite moving average, and play the game.

Have a great weekend, see you Monday,