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’s been a while since….we’ve experienced a risk-off day. We got one today. It was orderly and slow but compared to the moves of the tape lately, it was large. Capital flow was only 109% today. This is a bit larger than normal but given the drop in prices and the increase in volatility, this is low. My point here is that less money jumped into motion than I would have expected. That’s probably a good sign for the bulls because it suggests calmness among investors. Here’s a picture, tell me what you think.
Maybe it’s my misperception but I believe intraday momentum was at work today. Premarkets were slightly down and Trump PR fallout was a focus. Over the day the Barcelona terrorist attack and Trump’s tweets thereafter, softened the tape even further. Any robots, or people, playing the minute-by-minute trends had obvious signals: sell it and forget it.
I don’t know if the bulls will bounce back tomorrow. It might be too much to ask, even for the dip-buying community. Last week Thursday was dog of a day and Friday’s response was flatish. Maybe tomorrow is similar, maybe there’s a bit more dip coming. As long as something major doesn’t happen, weekends soothe the dip-buyers so I think the bounce comes Monday. This market has been a pattern-driven market. It’s been the most strongly reinforced and longest lasting pattern-driven market I can remember. The pattern will continue.
In the meantime, we’ve rediscovered the risk-off nature of the markets. When risk takes center stage, equities get dumped essentially across the board while bonds and the US Dollar get bought.
See you tomorrow