Market Update: 10-07-19

The Issachar Fund (LIONX), is fully invested in Bond ETFs.  I added to our bond positions (international, munis and short-term corporates) last week as they seem to have caught a bid while stock indexes dropped about 3% into Wednesday then rallied about 2% into Friday.  Stocks have been trapped in a volatile trading range between the 7/26/19 high and the 8/5/19 low.  Bonds have trended higher since July 26, but they have exhibited more volatility than I was expecting.  I believe this market is more suited for nimble day traders who can quickly move in and out than for intermediate-term trend followers who like to ride the slow and steady up-trends.  However, on a risk-adjusted basis, I believe bonds may offer more opportunity than stocks at this juncture.  Until a catalyst like a China Trade Deal or lower interest rates develop to propel the market past the July 26th ceiling of resistance, we will likely trade between the 7/26 peak and the 8/5 trough.  A better than expected earnings season with stronger guidance could also be a positive catalyst to move the marker higher past the all-time highs set on July 26th.  While I may have opinions about what I think the market will do, I try to let price and volume charts dictate my actions ultimately seeking to avoid life-changing loses.  I am seeking to capture most of the uptrend and avoid the major declines because I believe avoiding major losses is a primary component to long-term investment success.  LIONX is a BRI, Trend-Following, Risk-Managed, Alternative, Tactical Mutual Fund managed like a Hedge Fund seeking low-correlation to the stock indexes.  The Fund seeks moderate capital appreciation consistent with capital preservation.   (Portfolio holdings are subject to change at any time and should not be considered investment advice.)

Here is a link to the latest 3rd Quarter Issachar Fund Fact Sheet

China is coming to America for Trade Talks on Thursday!  This may be the next big piece of news that moves the market one way or the other.  I doubt that China will agree to stop stealing our intellectual property therefor, I do not see Trump cutting a deal with China anytime soon.  Recession fears spooked the market last week on weak manufacturing numbers (weakest reading since 2009) but the Goldilocks job’s report on Friday squelched those fears.  The major stock indexes are trading near their 50-dmas so I could make a case for them going in either direction at this time.  A European Union summit will take place on October 17, and Brexit will be the hot topic with an official Brexit deadline of October 31.  The FOMC will meet again on October 29-30 to discuss the 82% chance of a rate cut that Fed Watch is currently predicting.  The fourth quarter has been a historically strong one, but recession threats, impending impeachment and tariff and trade issues have the potential to sour the stock markets.  If the stock market weakens then I would expect money to flow into bonds.

QE is still alive and accelerating!  Therefore, I conclude that we may not see a recession until QE runs out of gas and I believe there is still plenty of QE left in the tank.  I do not see inflation spiraling out of control anywhere around the globe nor do I believe the Fed will raise rates at the wrong time like they did in Q-4 2018.  Keep your eyes on the giant QE ball of liquidity and enjoy the party while it lasts because one day there will likely be a price to pay for creating something (money) out of nothing (air).  Nothing in the market lasts forever including QE and bear markets and recessions still do occur now and then so let’s enjoy the party while it lasts.

Bottom line:  Stocks continued in a trading range and bonds have been trending up, so we are in bonds for now.  Stocks are a bit extended so I would not be surprised to see the indexes retest the August lows of support which would be about a 4% decline.  Thanks for Your Trust and Business!

Member organizations: KA, NACFC, CIF, OSC, NAAIM and here is a podcast link to my interview on The Real FBI.       

Biblical Responsible Investing (BRI) is the term used to describe the activities of Christian investors who purposely align their investment choices to support their Christian beliefs. The Fund is ESG (Environmental Social Governance) conscious and will not invest in securities with a negative InspireImpact Score.     

When he had received the drink, Jesus said, “It is finished.” With that, he bowed his head and gave up his spirit. John 19:30  (Thank God Jesus did all the Work so we can Rest in His Peace by His Grace Alone!)  

 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, Inc is not affiliated with Northern Lights Distributors, LLC. 

Important Risk Information  Mutual Funds involve risks including the possible loss of principal.  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. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the inability to collect revenue, for the project or from the assets. Moreover, an adverse interpretation of the tax status of municipal securities may make such securities decline in value.  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.  If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments.  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.    If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments.  NLD Review Code: 3733-NLD-10/07/2019

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