The Issachar Fund is slightly invested in growth stocks. I did a lot of selling last week before earnings announcements, and I have lots of cash to invest. However, the major indexes may have put in a short-term top, and it feels like the market is ready to roll over and correct a bit. I have a rule not to hold a stock through its earnings release because the risk of a gap down in price on an earnings miss is too great. I have a hard time finding growth stocks to buy that are not already extended in price, so I will exercise discipline and wait for a better opportunity. The major indexes are near their highs, but I see lots of stock price deterioration beneath the surface. Most of the stocks that I follow have been breaking down after earnings, and that tells me that investors might be worried about Biden’s big government tax and spend plans. I am cautiously optimistic, but I will be patient and wait for stocks to set up again before buying. Maybe the market is telling us that it may be time for another correction because the “good news” has been mostly met with more sellers than buyers. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed lowered its balance sheet by $39 billion last week, but the trend is still up! I believe the Fed wants to keep rates low to spur economic growth, but they are scared of inflation. Printing too much money too fast could produce runaway inflation which would likely be followed by higher rates. Higher rates could derail the economic recovery that we seem to be on, so the Fed has to be careful, or they could potentially create a bigger problem. If the Fed is forced to decrease its balance sheet before they are ready, things could get ugly fast. I believe that as long as the Fed is allowed to expand its balance sheet, they might be able to offset Biden’s proposals. However, if Biden steps too hard on the economic brakes while the Fed lightly steps on the gas, it could produce a recession that no one will like. I am watching the dollar and rates, and I do not see any caution flags flying yet on that front, but I am concerned.
Bottom Line: Issachar is less invested than the prior week as price action after earnings announcements are not very encouraging. The major indexes are near all-time highs, but the action below the surface has me concerned. We may be setting up for a correction or a minor pullback. I am patiently waiting for proper buy points before taking any new positions, but they are hard to find. Patience is a Fruit of the Spirit, so I wait.
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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.IssacharFund.com. 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. The Adviser’s judgment about the attractiveness, value, and potential appreciation of particular asset classes and securities in which the Fund invests may prove incorrect and may not produce the desired results. Past performance is no guarantee of future results. Ratings are only one form of Fund performance and should not be used as the sole consideration in making an investment decision. Opinions expressed are subject to change at any time, are not guaranteed and should not be considered investment advice. For more information regarding the fund, including current performance, please visit www.IssacharFund.com. Review Code: 5229-NLD-5/3/2021.