The Issachar Fund (LIONX), is Defensively positioned in Cash except for one small 3% stock position. My junk bond average Risk On/Off indicator is still flashing “Risk On”. However, the junk bond average seems to be up against a strong ceiling of resistance. My “buy right” discipline has me cautiously waiting for what could be considered lower risk buy points of which I am finding very little to get excited about. The S&P 500 Index is also trading up against major resistance last reached in July. This is the third attempt to breakout since July so each time it fails it becomes harder to overcome. Consequently, I am expecting the market to bounce lower unless we get blow-out earnings, a China deal signing or an over accommodative Fed. Earnings have been good, but I am not seeing a lot of stocks breaking out of sound base patterns on above average volume, so I remain a skeptic until proven otherwise. My “watch list” of stocks is full of stocks with, what I believe are, great technicals and sound fundamentals but most of them have high P/E multiples trading near the top end of their 5-year range highs. In other words, these “leaders” appear expensive and next year earnings estimates are in the low single digits which does not look like a buying opportunity to me. However, if the market finds a way to prove me wrong, I will be looking for ways to participate in the advance. I believe it is prudent to sit patiently on the sidelines while the market digests big stock earnings releases and Fed announcements. LIONX is a BRI, Trend Following, Liquid-Alternative Mutual Fund that is Actively Managing Risk like a Hedge Fund seeking low-correlation/beta/risk to the stock indexes. When my Strategy identifies a low risk environment, I seek to invest in junk bonds/growth stocks with strong technical chart patterns and sound fundamentals. During high risk environments I seek to avoid Life-Changing losses. The Issachar 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.)
Fed Watch is predicting a 93% probability that the Fed will cut rates 1/4 % on Wednesday. I would think the bond market would be excited about an imminent rate cut and would be going up in price, but they are NOT! Maybe the bond market is telling us that we need more cuts? During the last round of QE in 2012, the Fed purchased $85 Billion of Treasury Bonds and mortgage notes per month in an effort to revive the market. On October 11, 2019, the Fed announced a shift in policy and stated they will buy $65 Billion in Treasury Bills during October and November with additional monthly purchases through June 2020. The Fed claims this is not QE and it is just to meet some short-term liquidity needs in the banking system. However, I believe they are worried about “liquidity and credit” and they are trying to prevent a potential crisis in the making. I believe the Fed may eventually be forced to lower rates again after Wednesday due to slower economic growth in America. This additional stimulus could be the “catalyst” the market needs to take us higher, but it does not appear that we’re there yet. Germany appears to be teetering on the verge of recession a they just admitted that their “open border” policy has not helped their economy grow as expected. Maybe they will build a wall after all? Germany has negative interest rates which means they are GETTING PAID to borrow money. Imagine that! I believe that our Fed was way too fast to raise rates, and way too slow to cut so we may be headed closer to 0% rates sooner than many believe. My eyes are on the Fed and how the market responds to what they do!
Bottom line: Fasten your seat belts as this week could be a wild ride! The Fed is expected to lower rates ¼ point on Wednesday and the bond market does not appear to be impressed. The stock and junk bond indexes are trading at all-time highs and I expect resistance to hold and the market to bounce lower. Cash is a position. 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.
But by the Grace of God I am what I am…. 1 Corinthians 15:10
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. 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. S&P 500 Index is an unmanaged composite of 500 large capitalization companies. NLD Review Code: 3820-NLD-10/28/2019