Time to Hold, But! The Issachar Fund is about 67% invested, but indexes are weak! The Russel 2000 index of small-cap stocks broke out above its 200-day moving average (DMA) two Fridays ago, and it looked like the S&P 500 index of large-cap stocks would follow suit after $1 trillion of new spending was passed. However, all major indexes are now trading below their 200-DMAs, and it feels like the market has a downward bias. We are invested, but that could change if we do not get some follow-through buying this week in the leaders. Oil & gas, biotech, and solar stocks have been leading the market higher, but they could fall if liquidity does not come in quickly to support this rally off the June 16th low. The action in the market this week could be pivotable. Liquidity is the key! (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed decreased its balance sheet by $29 billion last week, which might be a bad sign! The Fed has drained $116 billion of liquidity from the market since April 19th, and I believe this bear market rally is feeling the effects of less liquidity. It is widely expected the Fed will raise rates at its next meeting, but it now appears they may be tapping the brakes of liquidity to fight the inflation they created. The 10-year treasury yield ended the week at 2.989%, and growth stocks with lots of debt typically do not do well in a rising rate environment. The US Debt Clock shows that the interest paid on the record $30.7 trillion of debt could exceed the US federal tax revenue if rates exceeded 3.5%. I believe the Fed has painted itself into a corner and will inevitably have to continue to print “fake” money because it can’t afford to raise rates above 3.5%. Where would growth come from if all federal tax revenue went to servicing our $ 30-plus trillion debt? We could already be in a life-changing recession with high inflation, and that kind of stagflation could be challenging for people who believe the narrive coming from Washington.
If the decisions out of Washington defy your common sense, then you are blessed and should Thank God! If you see the wrong and want to do something, run for office or support those who share your views. Please stand with me, and pray for God to restore worldly hearts to Him. Pray for God to send us new leadership in November to get this great country back on track and share His love with our neighbors.
Bottom Line: I may have been a little too optimistic last week, but I am not afraid to change my opinion when conditions change. We still hold positions on a short leash and dancing close to the door. The S&P 500 index hit textbook resistance at the 200-DMA on Tuesday and backed off below the 10-day Line on higher options expiration on Friday, which may not be a good sign. The Fed’s plan to address inflation may be to remove liquidity, crash the economy, and collapse demand. Twelve years of Fed-induced liquidity injections producing a bull market in stocks and bonds may be unwinding before our eyes. Please pray our leaders will follow God’s wisdom and do what is right in His eyes. Grace & Peace to everyone!
Let your conversation always be full of grace, seasoned with salt, so you may know how to answer everyone. Colossians 4:6
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: 5756-NLD-08/22/2022