The Issachar Fund (LIONX), is in Cash patiently waiting for our next opportunity. I sold all of the bond positions from the fund portfolio as the 20-year treasury bond dropped about 3.8% last week which caused yields to shoot higher. The 10-year treasury yields made a higher low on October 4th (new up-trend?) and yields are approaching a well-defined down trend line which could be penetrated shortly. If the down-trend line in yields are broken to the up-side, then we could be on the cusp of a major bond adjustment. The Fed Futures are predicting a 73% chance of a ¼ point Fed Funds rate cut BUT they were predicting a 78% chance just one week ago and an 82% chance two weeks prior. This tells me that the bond market may have been discounting the favorable China trade deal just announced last Friday. The bond market may be saying that the Fed is now less likely to lower rates at the October 30 meeting now that higher tariffs appear to be off the table. Tariff increases were expected to go into effect on Tuesday which could have dampened our economic growth therefore giving the Fed more room to ease. However, the Chinese “blinked” and agreed to start buying about $50 billion of agricultural products from our farmers. Trump simply agreed to not increase existing tariffs on Chinese goods coming into America. I believe that we finally have someone (Trump) standing up and fighting for what is good for America and it feels so good to not get bullied and taken advantage of anymore. I am so proud of America and our future looks bright! LIONX is a BRI, Trend-Following, Risk-Managed, Liquid-Alternative Mutual Fund that is managed like a Hedge Fund seeking low-correlation/beta to the stock indexes. The Fund’s Objective seeks moderate capital appreciation consistent with capital preservation. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
QE Lite may be the catalyst! The Fed announced that they will be buying about $60 billion per month of short-term treasury bills at least into the 2nd quarter of 2020. Where will they get the money to do this buying? They will create it out of thin air like they always have. The stock market seems to welcome any additional liquidity. When the Fed buys treasuries out of money they print for nearly nothing, this extra liquidity usually finds its way into equities in the form of higher prices. I believe this “mini” version of QE could be the catalyst that takes the market through the all-time high ceiling of resistance which is less than 2% away. However, the market may have to get through some favorable earnings releases and positive forward-looking guidance before breaking resistance.
I am not seeing a lot of growth stocks in buy-able chart patterns! However, I am seeing a lot of short-sell candidates which causes me to “pump the brakes” on this rally. I believe that we are in a 6% trading range bound by the 7/26/19 high and the 8/5/19 low. Until we break out of this trading range, I do not expect to do much equity buying unless I can find stocks with favorable lower risk entry chart pattern set-ups with great fundamentals. I saw a lot of “stalling action” on Friday where leading stocks rallied on the favorable China trade news then finished in the lower half of the day’s trading range. The major indexes are above their 50-dma once again and I believe that is a good sign, but the “stalling” or “selling into the news” has me concerned. Stocks seem to lack the conviction needed to climb higher and may need a more powerful catalyst than just not raising tariffs higher than they are and QE Lite. To me, America is winning again and I believe that should be good for the stock market. However, we may need some time for the market to study the details of the China trade agreement while the bond market decides which direction it wants to go. I love what I get to do!
Bottom line: The stock indexes continue to trade in a 6% trading range since July 26th looking for a catalyst to propel stocks higher. I believe this is a traders market. The weight of the evidence is telling me that the rally in the bond market since last November may be over. I believe patience is key at this juncture. I am building my watch lists and checking it twice. Thanks for Your Trust and Patience!
Here is a link to the latest 3rd Quarter Issachar Fund Fact Sheet
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, pro-life and pro-family and will not invest in securities with a negative InspireImpact Score.
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. Short positions are designed to profit from a decline in the price of a particular securities, baskets of securities or indices. The Fund will lose value if and when the instrument’s price rises – a result that is the opposite from traditional mutual funds. A Short is any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume they will be able to buy the stock at a lower amount that the price at which they sold short. NLD Review Code: 3772-NLD-10/15/2019