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 shortly after the market close.
The opinions expressed below are my own
It was a dip. There’s little else to say at this point. Last week injected some volatility and a fairly rapid selloff into US equities. The brief moment of fear passed. Investors had a weekend to look at the chart… you know the chart…this chart…the 10 year chart:
So the itty bitty blue candle on the far right is the dip of last week.
Whaddaya gonna do with a dip? The chart obviously gives us the answer and investors followed through.
The dip-buying behavior is so strongly reinforced for so long it will take a HUGE change in the state of the world to change that behavior (it is now a self-fulfilling prophecy). We did not experience such a change and so here we go again.
Unless an actual war breaks out, I don’t think any dip is going to last. So that should tell us how to play equities. Play long but understand that there’s a rickety foundation. At some point when stressed, it will crumble. The stress has to be big however. It’s going to take a war, or a recession, or a central bank hike, or some other globally massive catalyst.
In the meantime, the bulls get another chance to gloat at the bears.
See you tomorrow,