The Zigmont Report (Daily Market Recap for 2/28/18)

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

Glass half empty.  Today is month-end and the bulls controlled the morning.  They pushed the tape higher again and it looked like the usual market reaction to a down day: buy the dip!  Macro data today was in-line, for the most part, and pretty uninteresting until 10 AM.  The January pending homes sales release (-4.7% vs +0.5% est & 0.5% prior revised from 0.0%) was awful.

That threw cold water on the market and 10 AM was the intraday high for US equities.  From that point, we random-walked but the bears took the intraday gains and then some.  Treasury yields were not an issue

So the S&P finished down for the day (- and down for the month but still up for the year… and we’re moving on to March.

As an aside, capital flow was relatively light today (109%).  That’s unusual for two reasons:

  1. The market sold off significantly today
  2. Today is month-end

I don’t have a compelling explanation for today’s (relative) investor apathy.  I don’t think it’s a negative or a positive.  I just think it’s curious.  We’ll keep an eye on it and maybe an answer will present itself.

Looking ahead, just to tomorrow, we get Jerome Powell’s testimony to the Senate Banking Committee.

This event presents a do-over for both Jerome and the market.  If the Fed Chair thought his comments on Tuesday were misinterpreted, he will correct the market with more obvious language in the other direction (dovish stuff).  If the Fed Chair thought his comments Tuesday were essentially correctly digested, he’ll simply reiterate his remarks.  It is doubtful he thinks the market didn’t interpret his comments strongly enough, but if that’s indeed the case, he’s going to hit us over the head with a hammer with more hawkish tweaks.  Yikes.

We shall see tomorrow, see you then,