Market Update: 01-07-19

The Issachar Fund (LIONX) finished 2018 up 2.41% with a Maximum Draw Down (MDD) of only 4.43% while the S&P 500 Index finished 2018 down 4.38% with an MDD of 19.36%! LIONX is 100% in CASH waiting for the next opportunity.

Click here for my latest LIONX Fact Sheet

Fed Chairman, Jay Powell, promises to be patient with raising rates, jobs data comes in far-better than expected, China agrees to mid-level trade talks this week and the market blasts over 3% higher on Friday! The market seems to think that if stocks starts to tank, the Fed may take a neutral stance and withdraw their Quantitative Tightening (QT) and possibly do some Quantitative Easing (QE). It seems crazy when the market rallies off Powell’s comments about keeping the market “liquefied” in an effort to keep this market bubble inflated. The market appears to love liquidity and it is sad to say but I believe we may be “hooked on QE”. What will the “withdrawal” process look like? What will it take to “break” us from this “liquidity addiction”? A sudden crash or possibly a slow grinding Bear Market might do the trick. Who knows but, we may have put in a tradeable bottom where stock prices trade higher, ……for a while.

I believe that we are still in a down-trend and every pullback should be viewed as a counter trend rally. Historically, the odds for a continuation of the trend are higher than a trend reversal. I also believe that about 75% of the stocks will follow the trend of the indexes. The odds of catching a “winner” in a down-trending market can be low but there are exceptions if one knows how to trade against the “wind”. The “winners” tend to build bases and chop around while the indexes move lower. I have a few stocks in my buy list but I am patiently waiting for more volume confirmation of institutional demand before dipping my “toe in the water”. I have experienced Bear Markets where I tried to be a “hero” and ended up looking like a “zero”. Hopefully, I have learned how to be humble with a teachable Spirit.

Investor’s Business Daily (IBD) declares Friday a Follow-Through Day (FTD) and switches its outlook to a “Market in Confirmed Uptrend”! An FTD occurs during a market correction when a major index closes significantly higher than the previous day on greater volume. It happens Day 4 or later of an attempted rally. Leading up to a follow-through day, an attempted rally takes place during a downtrend when a major index closes with a gain. The rally attempt continues intact as long as the index doesn’t make a new low. IBD also changed its outlook from “Market in Correction” to “Market in Confirmed Uptrend” which is its most bullish stance. IBD has a great track record at calling bottoms so I hope they are right, this time.
Check out where MorningStar has placed the Issachar Fund in the One Year rankings of the Tactical Allocation Category:

Bottom line: There is a time to make money and a time to avoid losing money. Knowing the difference is a skill. I believe we are still in a Bear Market and this is just a counter-trend rally. However, I will listen to the charts because they reveal the truth about where we are and where we are headed. I would rather miss an opportunity than lose money.

(Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)

Health Tip:
Coffee is high in antioxidants, and studies show that coffee drinkers live longer and have a reduced risk of type 2 diabetes, Parkinson’s disease, Alzheimer’s and other diseases.

Inspirational Quote:
It does not matter how slowly you go as long as you do not stop.

Verse of the Day:
And without faith it is impossible to please God, because anyone who comes to him must believe that he exists and that he rewards those who earnestly seek him. Hebrews 11:6

The chart below shows the net return for 2018 of LIONX (red) verses S&P 500 (green). Notice how LIONX is far less volatile and has performed better than the S&P 500 Index below. I believe that managing risk is the key to long-term success. Pictures are better than 1,000 words! Past performance is no guarantee of future results.