Market Update: 08-08-22

The Issachar Fund is about 23% invested in fundamentally and technically sound stocks in the top sectors. The over-bought S&P 500 index is up over 13% since the 6/16/22 bottom; looking for an excuse to correct, but it has not found one yet. The employment report came out Friday better than expected, with more jobs created, and the market did not correct. I expected the market to experience heavy selling in this bear market rally after a hot jobs report implying steeper rate hikes by the Fed. However, the S&P 500 was only down a fraction, and the NASDAQ 100, while down hard initially, recovered nicely on below-average volume. The NASDAQ led the rally as investors piled back into the higher PE stocks, hoping the Fed would soon pivot to an easing stance. You know Fed rate increases may be near an end when they now have a term for it – the Fed pivot. The above two indexes are at resistance, and some sideways action would be an encouraging sign the market may be headed higher. The key will be how much liquidity is in the market for the buyers to overcome the sellers. If my thesis is wrong and our stocks violate their sell criteria, I will act accordingly regardless of what I think the market should do. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)        

Last week, the Fed decreased its balance sheet by $15 billion and had been trending down about 3% annualized since topping in April. The balance sheet is declining as the Fed promised, albeit slower, not to wreck the stock market and economy. The Fed may raise rates one last time in September and possibly start an easing cycle before the November elections. No one knows the future, but the market seems ready to reflate.

The $280 billion Chips Plus Bill and the $739 billion Inflation Reduction “green energy pork barrel” tax and spend bill should add plenty of liquidity to the stock market, but what will it do to our country? I can’t see how increased government spending will bring down inflation, nor will higher taxes be suitable for a recession. Common sense says it will not end well if we keep spending more than we make. U.S. credit card balances rose 13%, the highest increase in over 20 years. There are twice as many credit card accounts as people in America. Common sense says a nation of debt-driven consumerism is unsustainable with rising rates and a slowing economy. Net insider selling is now at levels last seen in January 2022, while retail investors are buying calls at levels not seen since 2020. I do not have much conviction that this is a new bull market, but I am following my strategy rules for getting in, and I have an exit plan.   

Bottom Line: Issachar is lightly invested and dancing close to the door in case a fire breaks out. When growth stocks rally on bad news, that is a good sign. The market seems to be hoping the Fed will pivot to an easing policy sooner rather than later. I am not seeing a lot of leading stocks breaking out of sound bases, but a lot of stocks are bouncing from bottoms. As a result, this bounce off the lows may be a bear market rally instead of a new bull market. I remain flexible and plan to follow my strategy and rules to protect and grow all assets in the Fund. Thank you for your trust and business, and I pray for an abundance of God’s blessings on you and this great country. Grace & Peace to everyone! 

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Peace, I leave with you; my peace I give to you. Not as the world gives do I give to you. Let not your hearts be troubled, neither let them be afraid. John 14:27

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, obtained by calling 1-866-787-8355 or visiting 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 an investment decision. Opinions expressed are subject to change, not guaranteed, and should not be considered investment advice. There is no assurance these opinions or forecasts will come to pass, and past performance is no assurance of future results. For more information regarding the fund, including current performance, please visit IssacharFund.com.   Review Code: 5733-NLD-08/08/2022

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Dexter Lyons