Market Update: 06-29-20

The Issachar Fund (LIONX), is about 25% invested in 27 growth stocks as of Sunday, June 28th!  (Listen to this Blog) I took some profits last week and purchased some new growth stocks, but LIONX is only about 25% invested as my conviction level has been declining.  I believe this market has been fueled by large amounts of excess QE money that has been finding its way into the stock market.  However, this excess QE that the Fed has created has started to decline and that has me concerned.  Two weeks ago, the Fed’s balance sheet declined by $74 billion, and last week it declined by another $12 billion.  There could be a legit reason for these declines, but I do not like the fact that the Fed’s balance sheet is declining in a pandemic.  I cannot imagine the Fed purposely undermining Trump’s chances for reelection by removing liquidity, but politics and personal biases can cause people to do dumb things.  I hope the Fed’s balance sheet starts expanding again because I believe the stock market has been hooked on QE and less QE may be enough to sustain a steep decline in the stock market.  If this minor pullback turns out to be more expected, then I will likely go to a 100% cash position seeking to avoid any life-changing losses.  (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

There was some heavy volume index rebalancing last Friday that has challenged my bullish bias!  I have been bullish on the stock market, but I am pulling in my horns a little to see how the indexes act this week.  Tuesday marks the end of the 2nd quarter and money managers typically try to make their portfolios look good by selling the laggards and buying the leaders, so we may see more volatility as managers do a little window dressing.  I believe the “work from home” theme of stocks still looks like they are under accumulation and that is where LIONX is primarily invested.  If these leaders start to roll over in price under heavy selling distribution, I will not hesitate to liquidate positions and wait for the next buying opportunity. 

Bottom line:  I believe this is a stock pickers market and not a buy the index market where a rising QE tide lifts all boats.  The leaders are still leading, but some have come in hard recently and my eyes are on the exits should the selling continue.  The big cap index is about 10.4% below its high.  The small-cap index is about 18.8% off its high while the tech index is only about 3.5% off its all-time high.  Cloud, software, medical, and internet tech stocks have been the leaders and we should soon find out if they will maintain their leadership.  If the techs breakdown, then I believe we could be in for some serious economic trouble.  I believe a steep stock market decline ahead of the election would not bode well for Trump’s reelection.  I believe God gives favor to whom He decides will be President and God gives wisdom to anyone who asks.  May God’s grace, mercy, and wisdom be with you always!           

The one who gets wisdom loves life; the one who cherishes understanding will soon prosper. Proverbs 13:8

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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.  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.  For more information on LIONX, please visit LIONX.net.   NLD Review Code: 4637-NLD-6/29/2020

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Dexter Lyons