Market Update: 01-22-19

The Fund is 100% in CASH patiently “stalking” a few stocks to buy On October 3rd, 2018, (I went to CASH) the Fed indicated that they were “a long way” from getting rates to neutral (indicating more rate increases on the way) and the S&P 500 Index dropped over 19% until bottoming on December 24th.  Since Christmas Eve, the S&P 500 has formed a V-Bottom pattern and is up over 13% (only about 8% from the high) after the Fed indicated they may slow their rate increases.  Judging from this V-Bottom, I would not be surprised to find out later that the Fed has halted its Quantitative Tightening (QT) and re-implemented some form of Quantitative Easing (QE) to appease Trump and the markets.  V-bottoms were trademark (signature) patterns witnessed during the QE era, but we are now in QT mode, right?  I believe that the market was expecting the Fed to plunge us into a recession with its rapid rate increase posture and now the market expects the Fed to “stand down” to not hinder the market’s advance.  China just posted its slowest economic numbers since 1990, do you think the US will grow faster or slower now that China’s economy is struggling?  Maybe the Fed got the message and this time is different?   

Volume (the heartbeat of a stock) has not been “strong” coming off the bottom.  I believe the market is “concerned” with the negative impact to corporate earnings should  China and Trump not be able to work out a “trade deal” before the March 1st  tariff increase deadline.  A prolonged government shutdown could also negatively impact earnings.  I believe the market is a forward looking “discounting” mechanism and when the market factors in a reduced income stream then there is potentially less money willing to “commit” to the stock market. The indexes were approaching resistance while volume was “drying up” forming some “wedging” (higher prices while volume declines) action.  However, index prices appear to have broken through a prior level of resistance (which now serves as support) AND volume has been increasing.  I was waiting to see how the indexes would navigate through their resistance levels and I now have more conviction that this advance may have some “legs” to stand on.  However, the next challenging level of resistance for the S&P 500 may be its 200-day moving average which is 2.7% higher.  My Watch List of stocks is getting bigger every day, but I am patiently waiting for proper break-outs and an attempt to give me a better probability of success.  Seeking to buy ‘right’ is my first line of defense, and I feel, a major component of sound risk management.  I have found patience and discipline can often be an effective combination!   

FOMO is the “Fear of Missing Out”.  My emotions sometimes “flare up” and want me to “get invested” in a panic FOMO mindset.  This is a normal psychological fear in my head and that is where it should be dealt with.  I sometimes feel that this winning trade will never appear again.  Over time, I have learned that this is not likely.  The current trade is just a trade in a long series of trades, and I can never know without hindsight if it’s a winning or losing trade.  .  I trust my expertise and discipline to keep me focused on time-test rules instead of emotions.  Fear and Greed can be two powerful challenging emotions that most investors face.  If they are not properly channeled, Fear and Greed could lead to life-changing/long-term consequences.  I believe an investor should never be a “rush” to buy stocks.  Consequently, I try to do my “homework” at night, so I have a plan for tomorrow. I always advise to develop a plan that works for you and find the courage and discipline to stick to it.  Never forget, none of us are as smart as all of us (the market).

Bottom line: I believe the indexes are extended after a V-bottom rally and due for a pull-back to consolidate recent gains.  I am patiently seeking to buy fundamentally strong stocks coming out of sound base patterns, but I feel most have run too-far too-fast, so I wait.  I would much rather miss an opportunity than lose money.  Put your money with my money and I promise to manage them exactly the same!   


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 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.

Quantitative Tightening (QT) is a contractionary monetary policy applied by a central bank to decrease amount of liquidity within the economy.  

Quantitative Easing (QE)is an expansionary policy aimed at increasing the money supply in order to stimulate the economy.

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: 3086-NLD-1/22/2018

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Dexter P. Lyons

Dexter P. Lyons is a Christian Money Manager seeking to honor God in his profession as a Portfolio Manager of a No-Load Mutual Fund.