Market Update: 04-28-20

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The Issachar Fund (LIONX), is about 60% invested in 23 growth stocks as of 4/26/20!  I am a risk manager, so I try to invest in positions that can be sold quickly when it is time to get out.  I reduced market exposure after the S&P 500 dropped over -3% last Monday in response to a historical oil price drop that rang loud across the globe.  Normally future oil prices (futures) in forward months are lower than current “spot” prices, but we just witnessed the unimaginable.  West Texas Intermediate (WTI) Crude Oil prices lost more than -250% to trade below -$40 a barrel as futures contracts expired last Monday!  Yes, oil producers were paying more than $40 a barrel to take their oil because they could not find a place to store it fast enough (backward contango).  We have seen future oil prices trade above spot prices (contango), but oil trading below zero was unprecedented.  We knew oil storage was “at capacity” due to the COVID lockdown oil demand reduction, but now we know how “full” the oil tankers are.  This is just one of the many unintended consequences of shutting down an economy.  Now I hear that they are forcing Futures and Options traders out of their forward month contracts.  A major global oil drilling company, Diamond Offshore, filed for bankruptcy. I wonder what other “second-order effects” are looming?  However, I am still bullish on growth stocks and looking to get more exposure because the trend appears up.  We do live in interesting times! (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)    

Stocks are breaking out on above-average volume after earnings and that is a good sign to me!  I am finding many growth stock “leaders” trend higher in price on what appears to be institutional demand so that is where I am focused.  While I hear “opinions” that “we need to test the lows”, I am going with the “tell” of price and volume action and it is telling me that uptrend may continue.  The Fed has the unique ability to create money out of thin air so there is theoretically no limit on how much money they can create in fact, the Fed’s balance sheet increased by over 200 billion last week alone!  The Fed and Treasury recently got together and created a Special Purpose Vehicle (SPV) that allows the Treasury to sell bonds to the Fed.  The proceeds of the bond sales are placed in the SPV which allows the Fed to “lever up” and spend about 10 times more than what is in the SPV on basically anything it wants to.  I am seeing evidence that the Fed is buying corporate bonds, muni bonds, junk bonds, and ETFs of all shapes and sizes to support the markets and send a signal to those nasty short sellers trying to drive prices lower.  I honestly believe the Fed “has our back” and they will do “what is necessary” to spur economic growth at all cost.  After this latest round of $484 billion of stimulus spending, it appears that the small caps are outperforming the large caps on a relative strength basis and that is a good sign to me.  We may be witnessing the Fed’s “invisible hand” at work fighting the “invisible coronavirus enemy”.  However, I am confident that we will win because we are America and that is what we do!  We Win!         

Bottom line:  The Fed’s massive amounts of QE continues to flood the market in hopes of preventing a recession/depression and I believe they will succeed.  The trend is up, and I plan to go with the flow until it changes.  I remain flexible, unbiased, and focused on the bottom line.  Fear is not from God.  Operating from a position of fear is not wise.  Trust God who loves you unconditionally and receive His love, so you can love your neighbor.       

Links to: My Story, Strategy, Blogs, Interview, and Fact Sheet

Trust in the LORD with all your heart, and lean not on your own understanding; in all your ways acknowledge Him, and He will make your paths straight. Proverbs 3:5-6

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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., (HCM) is not affiliated with Northern Lights Distributors, LLC.  

Important Risk Information: Mutual Funds involve risks including the possible loss of principal.  An investment in the Fund may not be appropriate for all investors.  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 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.  If the Fund 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.  Past performance is no guarantee of future results. S&P 500 Index is an unmanaged composite of 500 large-capitalization companies.

Biblical Responsible Investing (BRI) describes the activities of Christian investors who purposely align their investment choices to support their Christian values. LIONX is also ESG (Environmental Social Governance) conscious, pro-life, and pro-family. LIONX is a BRI, Trend Following, Liquid-Alternative, Tactical Allocation 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 growth stocks/junk bonds with sound fundamentals and strong technical chart patterns.  During high-risk environments, I seek to avoid Life-Changing losses.  The Issachar Fund seeks moderate capital appreciation consistent with capital preservation.  The Fund’s Adviser (HCM) is Celebrating 30 Years of Actively Managing Risk!  99% of my liquid net worth is invested in LIONX, so I have the incentive to avoid life-changing losses when the next recession/bear market occurs.  Before June 2019, I was not honoring God by investing in companies that support abortion, pornography, human trafficking, etc. then God touched my heart.  He revealed to me how to screen out “bad actors” and make His Fund a BRI Fund.  Since partnering with Inspire, LIONX has only invested in companies with positive Inspire Impact Scores and I am very pleased with the results.  The ­Inspire Impact Score is a faith-based ESG (environment, social, governance) security selection methodology that seeks to identify the most inspiring, biblically aligned companies in the world.  I welcome you to join me as a shareholder of LIONX and I promise to treat your money like my very own.  NLD Review Code: 3529-NLD-4/28/20200

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Dexter Lyons