Market Update: 07-11-22

The Issachar Fund sits patiently in Cash (100%)! My perception of risk is still high as NASDAQ 100 has rallied into its 50-DMA line of resistance on light volume. Nothing has changed, nor do I see it changing, so I expect the market to drift sideways to down in this trendless market. Anything can happen, and I stand ready to change my opinion if fundamentally strong stocks set up properly. A good earnings season could turn things around, but I do not see that happening due to the policies in place. Inflation is still high, and the Fed is still in rate-raising mode after a strong jobs number on Friday. I do not see a sustainable uptrend developing or the “Fed to the rescue” V-bottom prevalent in recent years. It is different this time because the Fed is raising rates instead of lowering rates (QE), and they are unwinding their balance sheet (QT). I believe the market will head lower for another wave of selling that could lead to scary capitulation selling where investors sell at any price. Then the market could be ripe for a tradable bottom, but I will take it one day at a time and manage the risk accordingly. Junk bonds are still in a steep downtrend showing no signs of a bottom, indicating little investor appetite for risk, so Cash could be a good resting place. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

Last week, the Fed DECREASED its balance sheet by another $20 billion, so the trend does not look good! The short-term balance sheet trend is down, and if they continue their unwinding process, the lack of liquidity they had been providing could push the indexes lower. The Fed has made it clear that they plan to raise rates another 75 bps at their next FOMC meeting on July 27th. Higher rates indicate inflation is still a problem they are trying to tame. I believe this QT experiment could cause a bear market like we have never seen. Investors have been conditioned that every bear market decline has always recovered, so there is no reason to sell. The only problem is that a bear market where the Fed raises rates and reduces its balance sheet could take longer to recover than most are willing to wait. Everyone has a threshold of pain where they draw a line in the sand and say I can’t take it anymore. The same concept applies to faith and what you believe. Think about what you believe and are willing to die for and whether it is worth it.     

Bottom Line: Cash is still an excellent place to patiently wait for the next opportunity. I see a lot of downside risk in the market and minimal opportunity, even on the short side. Shorting can be dangerous because some of the strongest rallies occur in bear markets, and you do not want to be short while the market is up big. I have been managing risk for over 32 years, have learned lessons the hard way, and have no desire to learn them again, so I am content in Cash. Grace & Peace to You!  

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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 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   Review Code: 5583-NLD-07/11/2022

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