Market Update: 08-17-20

The Issachar Fund (LIONX, BRI, ESG), is 100%in Cash as of Sunday, August 16, 2020.  (PodCastThe market was not rewarding us for taking risk, so I sold all remaining stocks in LIONX. Most of the leading growth stocks that I follow have experienced steep price declines which tells me that risk is likely elevated and maybe it is time for caution.  Many of the former stock leaders have busted chart patterns that will need time to repair before I can buy them again.  I am looking for growth stocks with three consecutive quarters of increasing sales and earnings and double-digit earnings estimates for next year then I try to buy them coming out of sound base patterns which is hard for me to find at this time.  The market was not rewarding growth, so I took some chips off the table while I wait for the next wave to ride.  In my last 30 plus years of investing, I have made many mistakes.  As I grow older in knowledge and wisdom, I try to study the big mistakes and not repeat them.  Staying fully invested in a correction or bear market can be a big mistake, in my opinion.  I do not think that we are in a correction or bear market, but I do believe the risk is elevated.  When the dust settles and the leaders offer better buy points from sound base patterns, I plan to jump back in.  For now, I am patiently watching and waiting for the next opportunity to emerge. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

The S&P 500 Index (500 large-cap stock weighted) is approaching the all-time high that was last reached on February 19th!  Technically, this February high is called “resistance” because it marks a price level where sellers overwhelmed buyers.  From the high on February 19th to March 23rd, the S&P 500 Index dropped over 33% then it has rallied over 50% just to get back to the February 19th high, so here we are.  I do NOT see a catalyst to propel the market past this line of resistance unless Congress approves another $3 trillion stimulus relief bill which has little chance, in my opinion.  Maybe the market has come a little too far too fast and it may need some time to back and fill and build up some momentum to blast through this tough line in the sand of resistance.  I believe the market will stall here and possibly head lower.  If I am wrong and the market breaks through resistance, I will seek out the leading horses.

Bond prices have declined every day for the last six trading days and yields have consequently risen!  These rising rates have not helped the dollar’s continuous steep decline nor will rising rates help people wanting to refinance or build a home.  Gold was rising with a steady declining dollar mainly due to rising US debt devaluing the dollar, but gold has also lost about 5% from its recent peak.  Junk bonds have also rolled over indicating to me that investors’ appetite for risk is waning.    

Bottom line:  My perception of risk in the market has elevated to a level that I last witnessed back in February, so LIONX has moved to an all-cash position.  I am not saying the market will crash this week, but the risk of a steep decline appears to too great, in my opinion.  I believe the S&P 500 Index needs an infusion of fresh new money to overwhelm sellers and blast through this all-time high line of resistance, but I do not see that happening unless congress passes another massive spending bill.  If the old stock leaders resume their leadership role or new ones take over, I will do my best to get back in sync.  As you can see, LIONX is a mutual fund but I manage it like a hedge fund.  I manage the risk and the market determines the return.  Grace & Peace to everyone!       

For all have sinned and fall short of the glory of God, and all are justified freely by His Grace through the redemption that came by Christ Jesus.  Romans 3:23-24

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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, which can be obtained by calling 1-866-787-8355 or visiting https://www.LIONX.net.  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 to be incorrect and may not produce the desired results. Past performance is no guarantee of future results.  For more information on LIONX, please visit LIONX.net.   NLD Review Code 3935-NLD-8/17/2020