Market Update: 09-04-18

The Issachar Fund (LIONX) is 35% Long in Equities and 65% in Cash as of Friday, August 31, 2018. LIONX holds 1 US Quality ETF (1%) and Various (23) Stocks (34%). LIONX had some very nice gains that were getting extended, so I took some profits off the table. Stocks are still coming out of basing patterns on strong volume and that is very encouraging as I look for new opportunities. I hope to get fully invested real soon but I will let the charts speak for themselves.

Leading stocks are still breaking out of sound basing patterns and that gives me conviction that this Bull still has some room to run. I believe the market follows the leaders and not the other way around. In my opinion, the institutions tend to hire the best analysts who do extensive research to find the best stocks to buy and sell. When they buy or sell, they usually do so with huge dollar volumes and that is what I like to follow. I try to follow the leaders because they give me clues as to where the money is flowing and going. Managing money is a little art and science but one must always remain open-minded and humble otherwise the market will check your pride.

I believe the market is due for a minor pull-back to ease some of the anxiety of a market near all-time highs. Keep in mind that there may be a lot of people who missed the run up and they could be looking for ways to get in so keep your buy list handy as we head into a seasonally strong period for the markets.

Reuters reported that 2nd Quarter GDP growth was raised to 4.2%! The Consumer Confidence Index hit an 18-year high! The Wall Street Journal reported that the US workers reported the highest job satisfaction since 2005 and we have historic levels of unemployment. Personal income rose 0.3% month-over-month in July. Personal spending increased 0.4% in July. Trump reached a trade deal with Mexico, but the trade concerns continue to plague our relationship with Canada and China and the market does not seem to care. The Trump tax cuts and deregulation appears to be filtering into the economy as people spend some of their fatter wallets. The stuff they buy usually translates to increased corporate profits which could lead to higher stock prices. All in all, I feel it could be a win-win for astute investors.

Investor’s Business Daily (IBD) says that the stock market is always in one of three possible conditions: Confirmed uptrend (green light), Uptrend under pressure (yellow light), or Market in correction (red light). IBD says that we are currently in a Confirmed uptrend which could be a good time to buy fundamentally strong stocks that are breaking out of proper base patterns. Uptrend under pressure means you should be very careful about making any new buys and be ready to take defensive action, since the uptrend may be running out of steam. Market in correction means that making new buys in a correction could be risky, since many stocks may follow the market’s downward trend. Junk bonds are still trending higher indicating investors have a higher appetite for risk. The S&P 500 Index is about 1% above its all-time high and continues to go up on good news and bad news and that is a good sign.

Bottom Line: The market appears to be in a Confirmed uptrend and I am looking for stocks coming out of sound basing patterns with great fundamentals. LIONX is up 5.5% YTD with a Max Draw-Down of 4.4% (see performance chart below). I am doing my very best to avoid the major declines and stay invested during the major advances.

Remember: Your Best-Interest is Also My Best-Interest!

(Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)

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Dexter Lyons