Cash is a Position! The Issachar Fund is 100% in Cash! Stops were hit as risk increased, so I exercised discipline and sold all positions. I was encouraged by the bear market rally that started in January, but in hindsight, it appears not to be the start of a new bull market. The market may have been anticipating the Fed was putting the inflation genie back in the bottle, but now it appears inflation is still too hot to say inflation is under control. The Fed’s favorite inflation indicator, Personal Consumption Expenditures (PCE), came in higher-than-expected Friday, the fastest pace since June. A hot Producer Price Index (PPI) from the prior week and a higher PCE could signal inflation is breaking out after consolidation. If inflation is not tamed, the Fed will likely raise rates higher for longer, and the market may be factoring in the inevitable recession many have been predicting. If that is the case, bonds and stocks will likely lose value, so I am considering shorting the stock and bond market with inverse ETFs. Leading stock charts have busted patterns of high-volume price declines, which indicates institutional selling. Big money creates the trends I like to follow, so when the trend reverses, I look for an opportunity to mitigate losses and possibly make money in a down-trend. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The S&P 500 ETF (SPY) bounced off its 200-DMA support, hit resistance at its 50-DMA on higher above-average volume, and is sitting on its downtrend line started in January 2022 (14 months ago)! We are at a critical juncture, and the evidence’s weight tells me we may be headed lower. The 10-year Treasury yield is approaching 4%, and the down-trending dollar seems to have bottomed on February 1st and is now in a new uptrend. Rising rates and a strong dollar have not been friendly to international and domestic stocks, bonds, commodities, and precious metals. Cash should be a good place to rest while the market decides where it wants to go, and money market yields are pretty attractive these days.
Bottom Line: Issachar is comfortable in Cash while the market declines. SPY was up about 9% from 1/1/23 to 2/9/23 but has dropped about -5% since its peak and is now up 3.65% YTD. However, the short-term trend is down, and the fundamental/technical picture does not look favorable for the bulls. The bell is not ringing to say the rally is over, but I hear a dog whistle, possibly saying this was just a bear market rally and more downside action could be expected. My bias is on the short side, but I will wait for more evidence before taking any positions. I believe the market is preparing for a recession and discounting lower earnings which could lead to lower stock and bond prices. The charts reveal the truth. Thank you for trusting me to manage your hard-earned money. May God Bless and Prosper you and may the Wisdom of Jesus guide your every decision. Amen!
The one who gets wisdom loves life; the one who cherishes understanding will soon prosper. Proverbs 19:8
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: 5237-NLD-02/27/2023.