Category - Weekly Updates

Market Update: 04-15-19

The Fund is about 93% invested.  We have about 78% in short-term bonds, 15% in growth stocks and 7% in Cash and I am hoping to increase stock exposure shortly.  I believe all eight growth stocks have excellent fundamental and technical characteristics and appear to have sound chart patterns.  I am seeking the “best of breed” stocks in the industries that seem to be under accumulation.  The cloud, software and cyber-security industries look very attractive to me at this time.

The major indexes are at or approaching significant resistance and I would not be surprised to see a pull-back or consolidation.  The trend has been up since the Christmas Eve low and I am expecting the trend to continue with earnings coming in better than expected.  I do not like to play “earnings roulette” so I will likely not hold any position into its earnings release date.  The risk of an earnings or revenue miss, and a stock dropping is a risk I am not willing to take.  However, if I have a “cushion” or a substantial profit in the position, I may consider holding it through its earning release.  Either way, I would rather miss an opportunity than lose money.   

Stocks seem to be buoyed by the expectation that the current economic slowdown will be just a slowdown and not a recession.  The economic outlook on March 19 as represented by a steep drop in the bank stocks was for a severe economic decline and/or recession.  However, the interest sensitive bank stocks have rebounded nicely and seem to be back under institutional accumulation as above average volume is confirming higher bank stock prices.  Historically, the bank stocks or “financials” have been a reliable long-term leading indicator and they appear to be flashing an “all clear” signal.  Bond yields have spiked (highest level in over three weeks) recently also confirming that recession fears may be behind us.  Junk bonds also appear to be flashing a green light confirming higher stock prices, so the stock market risk seems to have subsided.  I am little concerned that the small-cap stocks are not outperforming large-cap stocks on a relative basis.  However, they could be just resting before resuming the out-performance they enjoyed off the Christmas Eve bottom.  Earnings expectations were being reduced in December in fear of a recession, so I am expecting a lot of positive surprises as earnings are being released over the next few weeks.

Bottom line: The trend is up but we are at significant resistance, so I expect some “choppiness” as we approach significant resistance and earnings season.  A dovish Fed, favorable earnings and a China Trade Deal seems to already be factored into the market.  Any change in that narrative could cause the uptrend to come under question.  For now, the trend is up!            

Now faith is confidence in what we hope for and assurance about what we do not see.  Hebrews 11:1

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.  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.    NLD Review Code: 3280-NLD-4/15/2019

Market Update: 04-08-19

Issachar Fund Market Update: Monday, April 7, 2019

The Fund is about 40% invested in short-term bonds with 60% in Cash.  I sold several stocks as stops were triggered and placed all proceeds in cash since bonds look a little extended.  Many of the Cloud and Software names were hit with heavy selling (especially on Thursday) as sellers dominated buyers.  The Cloud and Software stocks were two of the best performing sectors coming out of the Christmas Eve low, so they seemed “ripe” for profit taking.  If the market is about the stocks first and the indexes second, does this leading group breakdown bode badly for the market?  Time will certainly tell.  This heavy selling in the better performing sector leaders reminds me of the period prior to the 19% market drop we witnessed in Q4.  So far, it just seems like profit taking and sector rotation, but I would not be surprised to see some more selling spill over into other “hot” areas and then possibly the indexes.      

Large caps are outperforming small caps which is okay, but I would like to see the opposite as a possible confirmation that “risk was on”.  The broad market is in an uptrend and the major indexes are approaching the Q4 all-time highs albeit on lighter volume known as “wedging”.  I believe declining volume and rising prices (wedging) does make the “semis” more susceptible to pullbacks so I will be watching this closely for clues as to our next potential opportunity.  Junk bonds are trending higher indicating to me that investors may still have an appetite for risk.  Potential negative news (Muller Report and China Trade) seems to be out of the way at least for now so that should be good for the long side of the market.  The Fed appears to be led by a “flock of doves” aimed at keeping interest rates low with the potential for the next move to be a cut instead of a hike seems to be welcomed by the stock market.  The jobs number was much like Goldilocks’ porridge, not too hot as to provoke the Fed out of its dovish posture and not too cold as to conjure up images of an economy screeching to a sudden halt, kept things percolating higher on FridayMoney keeps flowing to where market participants assume the best chance for a rise in prices and some money appears to be flowing into the semiconductor space in possible hopes of a favorable U.S. – China trade deal.  The “semi” space is typically a higher risk area so “semi stocks” under accumulation would indicate to me that investors are in a “risk on” mode.  In summary, the market seems to be sending mixed signals, but all appears well at least for now.

Another recent “hot” sector that appears to be wilting fast is the “Weed Patch”.  The marijuana stock group was growing like “wild weed” out of the Christmas Eve low appears to be “exhaling”.  The recent “high-flyer pot” stocks like Tilray, Cronos and Canopy Growth are all trading below their 50-day moving averages so I would assume this is “dead” money for now.  Leading groups that start to “crack” as sellers pull the rug out from beneath otherwise constructive chart patterns may not be “constructive” market action in my opinion.  The banking sector is another area that recently caught my attention with a sharp five-day down-elevator “rug pull” right before 1st quarter earnings season.  Are the big banks trying to warn us of lower earnings that they will be releasing starting this Friday?  Some Chinese stocks appear to be under accumulation in hopes of a U.S. – China resolution in the near future so that could be constructive action.  Regardless of what my emotions and opinions might be saying, I try to remain flexible and open-minded and let the charts dictate my actions.                  
Bottom line: I am seeing the waters as a bit murky at this time.  I would like to see if the market can break through this area of “resistance” formed in Q4 before I re-commit capital to the market.  I am a risk manager and would consider risk to be lower if we get through this area of resistance which is where the market started its 19% decline into the Christmas Eve low.  Sector rotation is somewhat healthy in an on-going bull market as long as the money moves from one sector to the another.  However, if the money starts to flow out of the leading sectors into money markets then I will become more concerned that the market may be in trouble.  For now, the light is “green” but could be changing to “yellow” so keep your eyes on the road and never ever fall asleep at the wheel.  That could be a life-changing event that I am always working hard to prevent.               

Better is a little with righteousness Than great income with injustice. 
Proverbs 16:8

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.  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.    NLD Review Code: 3249-NLD-4/8/2019

Market Update: 04-01-19

The Fund is 83% invested (80% bonds, 17% Cash and 3% equity).  As my stock positions hit sell signals last week, I placed the proceeds in short-term bond ETFs and Cash since I could not find low-risk entry points in high quality leaders.  This is similar to what I was seeing in the 4th quarter of 2018 which then led the market into a 19% decline that bottomed on Christmas Eve.  I am not saying we are headed lower from here, just that we made need time to let the market reveal its next move.  My opinions, convictions and predictions are not always right so I rely on the charts to tell me what the market is doing, and I seek to act accordingly.  If my watch list of stocks develops opportunities for entry, then I plan to buy them and then follow my sell disciplines.  I believe buying right is my first line of defense and a major component of sound risk management.  The trend is still up and maybe we just need a little more time and patience to consolidate the recent gains.  I feel this six-day consolidation has been orderly, healthy, and necessary and many leading growth stocks are building second-stage bases that will hopefully lead to higher prices.  Patience takes patience.

Two Friday’s ago, the yield curve inverted and sent a shocking message through the markets that a recession could be on the way.  I do not know if I see a recession in the near future, but the banking index was maybe trying to warn us of a slow-down because it was already in a steep decline before the curve inverted.  Banks are sensitive to the economic growth because they borrow money on the short end of the curve and lend towards the longer end of the yield curve.  If the yield curve inverts (shorter maturity rates are higher than longer rates) banks tend to make fewer loans and therefore less profit.  Banks can borrow money from the Fed at the lower Fed Funds rate and buy longer dated treasuries as a way to maintain profitability.  However, the Fed tends to frown on such actions as it does not encourage economic growth which banks should be doing.

President Trump nominated Stephen Moore as a Fed Board Member.  Trump has criticized Fed Chair Powell for raising rates in December when the market seemed to be struggling higher.  It now appears that Trump was right, and Powell was wrong because the Gross Domestic Product (GDP) expanded at a 2.2% annual pace in the fourth quarter.  The expected GDP growth was 2.6% so raising rates in Q4 did not help the economy expand and likely caused it to contract.  Stephen Moore has indicated that he would like to declare an emergency Fed rate cut of ½ point!  Now I see why Trump wants him on the Fed Board.  I believe that President Trump wants a roaring economy and stock market into his 2020 reelection because it may help him maintain his Presidency and possibly allow Republicans to win back the House.  I also believe this would be a huge win for most of America.

Many leading stocks are forming basing patterns as they consolidate gains.  I believe the best stocks consolidate over time, not price.  The market and weak stocks fall while strong stocks go sideways.  Stock fundamentals show us what everyone already sees.  Everyone can see the numbers and determine if a company is growing or not.  I like stocks with strong fundamentals (especially recent quarterly earnings and sales), but I pay more attention to the chart patterns.  Chart patterns are an expression of the buy and sell behavior of market participants and charts give me an impression of the demand for a stock.  I like to buy stocks under accumulation and sell them before they go under distribution.

Bottom line: Managing a mutual fund is not always easy.  However, I have been managing money for 29-years and the market is always teaching me how to become a better manager.  I have learned to always remain open-minded and be willing to change my mind if price requires me to do so.  Lesson: buy right and never chase stocks higher.  I believe the market is going through some healthy digestion and we are setting up for the next up-move.  Patience is one of the Fruits of the Spirit and I am patiently waiting for our next opportunity. 

 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.  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.

Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results.    NLD Review Code: 3229-NLD-4/1/0219

Market Update: 03-25-199

The Issachar Fund (LIONX) holds about 52% Growth Stocks, 28% Short-Term Bonds and 20% Cash. I sold stocks that triggered my sell criteria in Friday’s decline. I stand ready to further reduce exposure as needed should the decline accelerate. I am concerned that this sell-off may be the start of a more serious decline, but I will let price and volume dictate my actions.

The Fed released (last Wednesday) that it expects ZERO rate hikes in 2019! The Fed also said that Quantitative Tightening (shrinking of its balance sheet as Treasury and mortgage securities mature) will conclude at the end of September. The market seemed to like these statements and proceeded to rally on Thursday. On Friday, the yield curve (3-month T-Bills – 10yr T-Bonds) inverted for the first time since 2007 and the market declined about 2%. The last 3 times this happened, we had a recession. That said, this does not guarantee a recession mainly due to the unprecedented levels of debt monetization or Quantitative Easing (QE) in the system. The yield curve slope has been flattening for quite a while. That tends to reduce the profit margin for banks because banks borrow funds at the short-end of the curve and lend at the long end of the curve. If a flat curve means there is little to no difference between the short and long rates, bank profit margin normally shrinks. If the curve inverts, lending can shut down as banks find it more profitable to simply invest in Treasury bills. If banks are reluctant to lend then it may become harder for companies to borrow money for expansion. If companies do not expand then it becomes harder for the economy to grow which could lead to a recession 6 to 12 months down the road. Stocks do not typically do well in a recession, but bonds tend to go up in price as yields decline. I do not believe that we are at risk of a recession 6 to 12 months from now, but I will let the charts tell the story.

I am now subscribing to a signal service. I have always been opposed to “black-box” signals that give mechanical buy and sell signals based on computer “code” because I believe they can eventually quit working without warning. However, I want to always remain open-minded with a humble heart and a teachable spirit, so I subscribed to one of the better-known signal providers in the industry. I plan to use this as a confirmation to what I am seeing in the charts. I hope to gain more trading conviction with this new signal service.

I have asked the Northern Lights Trust Board of Directors if I can make the Issachar Fund a BRI Fund. BRI stands for Biblically Responsible Investing. God put this on my heart while attending a recent Kingdom Advisor (KA) Conference. If approved, I will screen out (not buy) positions that do not line up with Biblical principles. Generally, companies that support abortion, pornography, human rights violations and the like will be excluded from the LIONX portfolio. There are now online screening tools (many of which are free) that allow anyone to type in a symbol and immediately see if the company is BRI compliant or not. I have always wanted to make LIONX a BRI Fund. However, I did not know how until I learned of these online screening tools at the KA Conference. God owns it all and it all belongs to him. My job is to be a good steward of the assets he is allowing me to shepherd while on this earth. If you have any comments, concerns or questions, please Email or call me.

Bottom line: The market took a hit on Friday and it has my full attention. It could be a way for the market to shake out the “weak hands” but it could be a major turning point. Possibly the market knew the Mueller report would be released or it could be an inverted yield curve that caused the market to decline on Friday. No one knows and no one rings a bell to say the bull market has ended so one must stay tuned to the clues that market gives. The next bear market could be the mother of all bears that wipes out retirements that lead to life-changing events. I will do my best to prevent this from happening to the shareholders in LIONX.

(Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)

Health Tip:
Fasting is not usually healthy. People who fast tend to lose more muscle than fat.

Inspirational Quote:
You cannot be the same, think the same, and act the same if you hope to be successful in a world that does not remain the same. Change is Good!

Verse of the Day:
Do not conform to the pattern of this world but be transformed by the renewing of your mind. Then you will be able to test and approve what God’s will is—his good, pleasing and perfect will. Romans 12:2

The chart below shows the net return for the last 12-months of LIONX (red) verses S&P 500 (green). Note the Return and the Volatility (risk). I believe that managing risk is the key to long-term success. Past performance is no guarantee of future results.

Market Update: 03-18-19

The Fund is about 95% invested in 2 Short-Term Bond ETFs (45%) and 35 Individual Stocks (50%) with 5% in Cash.  I continue adding to positions at opportunistic buy points and taking on new positions as they present themselves.  I try to buy the best “merchandise” (stocks) in the strongest sectors and hold them until they no longer meet my expectations.  The Software and Medical Sectors are our biggest weightings and those themes seem to be very much in favor among institutional investors.  When institutions decide to buy into a new theme or sector, they tend to leave big “foot-prints” as they accumulate shares.  I try to follow in their “foot-steps” and ride the “wave” until it fades.  As I see it, institutions are in the “accumulate” mode and so am I, until ……the trend changes.   

 I like what I am seeing in the market as prices head higher on higher volume.  All of the major market indexes have moved to their highest level on strong volume since the Christmas-Eve low.  The S&P 500 finally pierced through the “2800” level successfully after three previous attempts.  The small-cap Russell 2000 Index is the only major index trading below its 200-day moving (dma) average and could be ready to play “catch-up” as it “huffs and puffs” to stay above its 20-dma.  The S&P 500 is only about 3% from its all-time high and I believe “the high” will serve as a level of resistance.  However, the market seems to be firing on all cylinders and a favorable China trade deal could be the catalyst to launch the market past this next level of resistance.  Junk Bonds are also trending higher and that tells me that investors have an “appetite for risk”.  The Semi-Conductor stocks are starting to “lead” again and that has historically been a good sign for a stock market advance.  Of course, anything can happen, and I will do my best to stay invested during the major up-trends and avoid life-changing loses.    

The most recent pullback now looks like it was nothing more than a ‘buying opportunity within an ongoing bull market.  The NASDAQ was up 10 straight weeks in a row since the December low, so I was not surprised to see a down week 2-weeks ago.  Last week was an up week for the NASDAQ Index and we could be back “off to the races”, again.  The market likes to climb a “wall of worry” but during a bull market the focus should be to “maintain long exposure” and avoid the temptation to “short” just because we are near all-time highs.  The market appears to be in a “giving” mode so we will take what the market gives because one-day the market will not be so generous.  I plan to take it one-day at a time and “let it ride” until the trend starts to bend in the end.  We are just surfers riding the wave and our ability to make money is largely due to the size and extent of the wave, and not solely on our own magical abilities.  We can control the risk we take, and the market determines the return we receive.  My job is to keep it simple and try to stay on the right side of the trend because the “trend is your friend until the end”.         

It appears that global central banks may be expanding their money supplies again.  Central banks were in a “tightening” mode, but they may be shifting back to an “easing” mode.  They are trying to boost their sluggish economies especially the European Union (EU) as Britain prepares to exit (Brexit) the EU at the end of March.  The people voted for Brexit, but their congress does not want to honor the will of the people because government thinks they know better than the will of the people.  Does that sound familiar?    

Bottom line: I believe in consistency, simplicity and discipline and my job is to manage risk.  I believe risk is low and I am looking to increase exposure as I find new opportunities.  I plan to keep “pulling the weeds” (selling my losers) and “pruning my flowers” (adding to my winners) in order to “keep my garden growing”.  The market tends to take the “stairs up” and the “escalator down” so I never want to become complacent and stick my head in the sand and ignore risk.  I believe that “Risk Management” is the key to long-term success in the market.  I try to remain open minded and I am not afraid to change my mind.   

 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.  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.

Investments cannot be made in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. Past performance is no guarantee of future results. 

NASDAQ Indexis an electronic traded listing of over 5,000 active large and small companies.

Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index

NLD Review Code: 4394-NLD-3/18/2019

Market Update: 03-11-19

 

LIONX is about 95% invested.  We own about 75% in two short-term bond ETFs and about 20% in various stocks with about 5% in Cash.  I sold several stocks as they hit sell points and invested the proceeds to our short-term bond ETF position.  The bond ETFs we own have been trending up since the market topped in October.  The stocks we currently own are showing resilience and support while the indexes fall below their 200-day moving averages (dma). 

The Bull Market turns 10!  It has been 10-years since the market bottomed on March 3, 2009 and the long-term trend is still up even with the steep 19% Q4 decline we just witnessed.  During the last ten years, the Fed kept rates artificially low (near 1%) on the monetary side and that helped to produce stock market gains.  Cheap money allowed companies to borrow at low rates and do stock buy-backs which decreased the float and boosted earning causing stock prices to rise even higher.  Trump reduced taxes and regulation on the physical side and that helped to boost stock prices even more.  I believe that there will be a price to pay for this global sea of easy money, but we do not appear to be there yet.  However, I am watching for signs of a top like we had in October 2018 and will do my best to get out of harms way.  I am a risk manager and I never buy and hold anything because yesterday’s gains are gone, and tomorrow is all that counts.  I plan to ride the wave until it breaks.

A weak jobs number and plunging Chinese exports sent the Indexes further below their 200-dma last Friday.  However, the gap-down open ended closing near the open which is very constructive and shows signs of exhaustive selling.  The average growth-stock leader has been backing and filling since last Monday and that is also constructive action.  My watch list of stocks to buy has been building but I am waiting for more conviction to confirm if the recent index decline has run its course.  I am constructive on the market, but my discipline has me owning less growth stocks than I held two weeks ago.  If the market turns higher from here on strong volume, I plan to get more invested in stocks and less in bonds.  However, if the market heads lower, I plan to follow the dictates of my discipline.

Bottom line:  The market was due for a pull-back and the 2% drop may have been what was needed to correct the run-up off the Christmas Eve Low.  I stand ready buy new positions if the bull advances or sell existing ones if the bear comes out of hiding. 

(Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.) 

Health Tip:

Studies show that people who eat the most fish have a lower risk of all sorts of diseases, including heart disease, dementia and depression.

Inspirational Quote:

Everything you’ve ever wanted is on the other side of fear.

Verse of the Day:

Do not be anxious about anything, but in everything, by prayer and petition, with thanksgiving, present your requests to God. Philippians 4:6

 The chart below shows the net return for the last 12-months of LIONX (red) verses S&P 500 (green).  Note the Return and the Volatility (risk).  I believe that managing risk is the key to long-term success.  Past performance is no guarantee of future results.