The Issachar Fund purchased more stocks last week as I found secondary buy points in stocks that appear to have great fundamentals and technical chart patterns of accumulation! I believe the market’s long-term trend is up and seems ready for another leg higher as growth stocks appear to be catching a bid. I have noticed that recent IPOs seem to be in favor, which indicates speculation is still alive. Junk bonds are in a short-term sideways pattern like most indexes, meaning investors still have an appetite for risk assets. Yes, there is a lot of speculation coming from the stimulus checks of people “playing with the house’s money,” but that still counts. I believe that liquidity is the key to keeping this bull market running, and I see no signs of liquidity drying up. However, according to recent measures, inflation seems to be an issue the Fed has created, and they will need to address it shortly. There have been talks of Fed “tapering,” which could be what is holding the market back. If the Fed decides to reduce QE too fast, things could get ugly very quickly, and they know it very well. I always have an eye on maximizing gains, but the other eye is on the exit if the market looks ready to fall off a cliff. I want to stay in the market as long as I am rewarded for taking risk, but I do not want to ride through the next recession or bear market. There are no guarantees in the market, no matter what probabilities say the market should do. Until I start to see more warning signs, we will stay invested in stocks that seem to be under institutional accumulation. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed reduced its balance sheet by $19 billion last week to $7.9 Trillion! I am not too concerned. However, they executed over a record $1 Trillion of reverse repos (repurchase agreements) last week as a sign QE may be ending soon. The Fed uses the repo market to soak extra cash in the repo market to create a floor under market rates. Eligible counterparties lend money to the Fed for about .02% in return for Treasury collateral on an overnight basis. It seems like the Fed may be trying to keep money market rates above zero to avoid the dreadful consequences of negative interest rates in the economy. I think the Fed is very concerned with inflation, and they are using other tools to suppress rates to make us believe all is well. I believe the Fed will have to raise rates sooner than the market expects, which could be trouble for stocks and bonds.
Bottom Line: The market looks good as growth stocks catch a bid. I am dancing but dancing close to the door if the lights come on, signaling the party may be over. The Fed is doing many reverse repos trying to keep rates near zero, so that is good, I guess. I do know that God is still on the throne, and I trust that he is working all things for our good.
And we know that in all things, God works for the good of those who love him, who have been called according to his purpose. Romans 8:28
Links: Fact Sheet Performance PodCasts Blogs Strategy My Story Docs BRI/ESG
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. (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 making an investment decision. Opinions expressed are subject to change and are not guaranteed and should not be considered investment advice. Quantitative easing (QE) is a monetary policy whereby a central bank purchases at scale government bonds or other financial assets in order to inject money into the economy to expand economic activity. For more information regarding the fund, including current performance, please visit www.IssacharFund.com. Review Code: 9084-NLD-6/1/2021.