Market Update: 09-24-18

The Issachar Fund (LIONX) is 12% Long Equities and 88% Cash as of Friday, September 21, 2018. LIONX holds 9 Stocks exhibiting CAN SLIM characteristics in various industries. Interest rates have been rising rapidly in anticipation of the Fed raising short-term rates another quarter-point at their next meeting on Wednesday. Higher rates are causing the recent stock leaders to lag a bit while money rotates out of one sector and into another. I believe sector rotation is healthy for a bull market to sustain its momentum.

I have been actively buying and selling stocks attempting to maximize our gains and minimize our daily draw-downs. I would like to be more invested, but risk-management takes precedent over buying and holding an index fund through another 2008 (>50%) type decline. I am patiently seeking CAN SLIM type stocks under accumulation breaking out of sound basing patterns. I believe the Bull Market is still intact, but we may have to consolidate a bit here while stocks digest recent gains and stretched P/E ratios compress.

I have noticed that a few stocks that have lagged the recent advance are now starting to show signs of institutional accumulation. When institutions move into a position, they typically leave a trail of higher prices accompanied with increased volumes. Big institutions (mutual funds, hedge funds and pension funds, etc.) can’t hide their actions from a chart which is why I look at a lot of charts to get a feel for where money is flowing and going. Analyzing a chart to measure the supply of a stock with the demand for it, helps to keep my opinion or emotional connection out of the equation. I never fall in love with a company unless it has an attractive chart pattern and I always try to cut my losses when I am wrong. I buy based on the fundamentals and technicals, but I sell based on the technicals alone rather than wait for the fundamentals to deteriorate. I do not like to learn why a stock is going down if it violates a sell rule because the pain/loss can be life-changing. I try not to hope and pray for a bounce, and even more important, I try to never add to a losing position. Holding on to a losing stock does not change the fact that it is still a loss. I try to average up (buy higher) and not down (buy lower) believing that it is cheap and “on sale”. I am always looking for stocks with increasing earnings and sales because I feel that is certainly one important factor that moves a stock’s price. I have initiated starter positions in a few stocks that appear to be under institutional demand and I hope to add to these positions if prices continue to advance. If things do not go as planned, I will be quick to sell my losers and admit I was wrong so I can live to invest another day.

New Trump Trade tariffs with China continue to move the markets as the dollar slides into a previous June trading range. China’s Shanghai Composite rose 4.3% last week on rising volume to its best weekly gain in 2-1/2 years. This gain signals a new up-trend is underway on the Shanghai after being down about 15% this year. I am currently looking for some China-based ADRs to breakout and possibly add to the LIONX positions.

Smoking hot Pot stocks were hot and now they are not so hot. I believe that a lot of Bitcoin money has been chasing cannabis related stocks and it could dampen the Bitcoin craze.

Bottom Line: The trend is still up but recent leaders are lagging, and value stocks may take the lead for a while. I believe stocks rotating from one sector to another is healthy action for a rising bull market. The November elections could be the most important election in our life time. All my investable assets are in LIONX, so I Remained Focused on the Bottom Line Every Day!

PS: I will manage your money like it were my own!

(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