Market Update: 02-19-19

The LIONX Fund is about 60% invested!  I am holding positions in the Cloud, Health and Bond space as they appear to be under institutional accumulation.  I am seeing both strong fundamentals (sales and earnings) and technicals (chart patterns) and these “themes” appear to be in favor.  Cloud Computing is storing and accessing data and programs over the Internet instead of your local computer.  More and more businesses are moving to Cloud based services especially as Internet speeds increase (5G) and prices decline.  Historically, Cloud and Health stocks have been very little affected by the China Trade War and if it is resolved shortly, I would still expect “big money” may support these themes.  Bonds are generally doing well mainly because of an anticipated economic slow-down therefore I believe the market does not expect the Fed to raise rates any time soon.  I happen to think the next move by the Fed will be to lower rates.  I am seeking to buy leading stocks on weakness after exhibiting strength with the highest quality fundamentals, exhibiting the most strength in their industry groups.

CANSLIM could be becoming “dated” due to “everyone” having easy access to data and charts.  CANSLIM is a “system” for selecting growth stocks , developed by William O’Neil that has worked very well for many years.  However, I believe that “Systems and Black-Boxes” work until the don’t and no one really rings a bell to say the party is over.  It can be a painful lesson to “learn” that a “system” is “broken” usually because pride tries to keep you in while losses try to take you out.  I still follow the CANSLIM system, but my focus is shifting to more forward-looking metrics like earnings estimates and “new” chart patterns instead of past sales and earnings and base break-outs.  I have learned over the last 29-years that there are no  guarantees in the stock market, and nothing goes straight up.  My advice, listen and obey your God-Given Wisdom and Common Sense when your hear it, or things could get ugly if you don’t.

The Fed tightened liquidity and raised rates in Q4 2018 and the market dropped over 19% from peak to trough.  This steep decline was halted after the market started discounting dovish (lower rates) comments from the Fed.  It appears to me that the market is addicted to QE.  If/when the market fears that the Fed will resort to some sort of QT then I would expect another sharp protracted decline in the market.  For now, QE is a major “force” in this advance off the 12/24/18 low.  Reality is there will be another steep decline in the market, and no one will ring an alert bell.  I try to stay focused on the bottom line every day in an effort to avoid a life-changing event.  I do not plan to ever buy and hold anything because there is too much at stake if I am wrong.  I believe that risk should be managed and never ignored no matter how old one may be.       

The Big-Three major indexes are all trading above their 200-day moving averages (dma).  If these indexes start dropping back below their 200-dmas, then the rally since Christmas Eve may be in trouble.  Until then, the rally appears to remain in play.  I believe the driving force behind this rally is the easy-money policy by the Fed.  With $22 trillion in national debt, the need for low interest rates simply as a matter of budgetary survival becomes paramount. Don’t forget the Fed Chair who is a savvy business man (not an academic economist) was appointed by Trump and his next move will likely be to lower rates which the market may already be discounting.

Bottom line: The trend is your friend and the trend has continued up!  Junk Bonds are also trending higher and they have already taken out their October highs and trading near all-time highs.  I believe this bodes well for the market and I expect the indexes may take out their highs as well.  If I am wrong, I will be quick to do what is necessary to minimize risk in an effort to maximize our gains.  I wish you well!         

   

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, which can be obtained by calling 1-866-787-8355 or visiting https://www.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, Inc is not affiliated with Northern Lights Distributors, LLC.

Important Risk Information

Mutual Funds involve risks including the possible loss of principal.

The Fund may hold cash positions when 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 to be incorrect and may not produce the desired results.

Quantitative Tightening (QT) is a contractionary monetary policy applied by a central bank to decrease amount of liquidity within the economy.

Quantitative Easing (QE) is an expansionary policy aimed at increasing the money supply in order to stimulate the economy.

Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results.

NLD Review Code: 3170-NLD-2/19/2019