Market Update: 02-13-23

Extended but Not Broken!    The Issachar Fund is about 83% invested in 40 growth stocks and looking to get more invested in fundamentally and technically strong stocks in top industries! The market broke out of its 2022 downtrend on above-average volume at the end of January, so a little price consolidation is expected. Volume on recent up days has been greater than the volume on down days, which is a sign of accumulation, so I am encouraged the uptrend may be sustainable. I believe the market got a little extended on the upside, and our stock charts may have a little price damage, but they are not broken. The CPI report on Tuesday could be a market-moving event as the Fed remains “data dependent” in its efforts to tame inflation. The junk bond market has rolled over below its 50-DMA on above-average volume, which is concerning and bears close attention. This week could reveal whether the uptrend resumes or another down leg has begun. I believe the market is poised to resume a new bull market uptrend that started this January. If I am wrong and the charts say otherwise, I do not plan to stay wrong for long. Managing risk to avoid life-changing losses is the key to accomplishing our long-term financial goals. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

Investors can now purchase index options that expire daily! These new Zero Days to Expiration (0DTE) options have caused a lot of stock price volatility, causing a lot of mixed market signals. More than 40 million call options (betting prices go up) changed hands in a single day in early February. This was the highest on record, nearly topping 2022’s daily average volume for calls and puts (betting prices decline). Since the call option buying is a synthetic (leveraged) version of the stocks, once the buying is over, it creates a downside air pocket creating extreme price volatility as investors scramble to square up positions. We cannot argue with the market and must deal with what the market delivers. Our job is to manage risk, and the market determines the return we receive.

The Fed increased its balance sheet by $2 billion last week! This could be a sign the Fed may feel it has inflation under control. If so, they may achieve an economic soft landing where we avoid a recession as rates remain elevated in return for rate normalization. In other words, the all-might Fed restores order and balance to the universe.

Bottom Line: Issachar is nearly fully invested but cautiously waiting to see how the market reacts to the CPI report on Tuesday. If the market responds favorably, I expect to put our cash to work quickly. If the market takes a turn for the worst, then I expect to hedge (buy ETFs that short) or sell positions to my sleeping point. There have been a lot of “junk off the bottom” rallies in 2023 which tends to skew the indexes. In fact, in the S&P 500, 48 of last year’s 50 worst-performing stocks are up this year, on average, 17%. Thirty of last year’s 50 best-performing S&P 500 stocks are up this year, on average less than 1%. I believe a new bull market has begun, and there is still time to join the party. I honor your trust and will do my best to honor God with all He has blessed me. Grace & Peace to everyone, and may God bless you and your family.

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Investors should carefully consider the investment objectives, risks, charges, and expenses of the Issachar Fund. This and other important information about the Fund are contained in the Prospectus, obtained by calling 1-866-787-8355 or visiting IssacharFund.com. The Prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., member FINRA/SIPC. Horizon Capital Management Inc. (HCM) is not affiliated with Northern Lights Distributors, LLC.

Important Risk Information: Mutual Funds involve risks, including the possible loss of principal. An investment in the Fund may not be appropriate for all investors. The Fund may hold cash positions when the Adviser feels that the market is not producing returns greater than the short-term cash investments in which the Fund may invest. There is a risk that the sections of the market in which the Fund invests will begin to rise or fall rapidly, and the Fund will not be able to sell stocks quickly enough to avoid losses or reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. The Adviser’s judgment about the attractiveness, value, and potential appreciation of particular asset classes and securities in which the Fund invests may prove incorrect and may not produce the desired results. Past performance is no guarantee of future results. Ratings are only one form of Fund performance and should not be used as the sole consideration in an investment decision. Opinions expressed are subject to change, not guaranteed, and should not be considered investment advice. There is no assurance these opinions or forecasts will come to pass, and past performance is no assurance of future results. For more information regarding the fund, including current performance, please visit IssacharFund.com.   Review Code: 5207-NLD-02/13/2023.

 

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