Market Update: 12-02-19

The Issachar Fund (LIONX), is about 98% invested in stocks and sitting tight!  I added about 8% more in individual stocks last week.  I am buying stocks that have produced three consecutive quarters of increases in sales and earnings and forecasting double digit earnings for next year.  I remain bullish as the market appears to be rotating out of one sector into another digesting recent gains.  Rotation has been a way for the market to digest stocks that have recent price advances into stocks that have been consolidating.  The market looks healthy and constructive as it may be discounting the potential negative news of China trade, impeachment and the Hong Kong unrest.  If the market changes character, I reserve the right to change my opinion, but for now I am all in!  LIONX is a BRI, Trend Following, Liquid-Alternative Mutual Fund that is Actively Managing  Risk like a Hedge Fund seeking low-correlation/beta/risk to the stock indexes.  When my Strategy identifies a low risk environment, I seek to invest in junk bonds/growth stocks with strong technical chart patterns and sound fundamentals.  During high risk environments I seek to avoid Life-Changing losses.  The Issachar Fund seeks moderate capital appreciation consistent with capital preservation.  The Fund Adviser (HCM) is Celebrating 30 Years of Actively Managing Risk!  (Portfolio holdings are subject to change at any time and should not be considered investment advice.) 

Quantitative Easing (QE) appears to be still alive!  The Fed claims that what they are doing is “Not QE”.  However, I believe that they are still printing money out of thin air and that sounds like QE to me.  The Fed increased its balance sheet by $162 billion in October and that was the greatest monthly increase since 2008.  Since 9-11-19, the Fed’s balance sheet has increased by $270 billion which implies about $5.8 billion of daily liquidity being added to the market!  This $5 billion or so of additional liquidity has to go somewhere and I believe a lot of this extra cash is being used to sure up stock prices.  Who knows why the Fed feels the need to expand its balance sheet at such a rapid pace?  I believe Fed Chairman, Jay Powell, messed up last December and may have contributed to the Christmas Crash where the market fell over 19%.  I believe he is now trying to fix his mistake of raising rates too fast in what I believe to be a weak economy by adding liquidity to the market which tends to lift all boats.  Is the Fed doing this to get Trump reelected?  I believe Jay Powell wants Trump to be a two-term president and I believe this will help America in the long-run.  The market does not seem to care why the Fed has ramped up its bond buying program, it just keeps steady plodding along it’s merry way. 

Imagine having to invest $5.8 billion per day!  Where would you put that kind of money to work?  I would not invest it in bonds because I believe yields are NOT headed lower which would benefit bond prices.  I expect yields to be flat at best over the short term.  Fed futures is predicting a zero % chance of a ¼ point rate cut and a 4% chance of a rate increase at their next meeting in about 10 days.  If I had $5.8 billion per day to invest, I would invest it in what I believe are companies with solid fundamentals and sound technical chart patterns of which I am finding plenty to choose from.  Keep in mind that the Fed said it plans to do about $60 billion of bond purchases every month at least until March 2020!  When the Fed buys bonds, the bond holders now have cash to invest and it has to go somewhere.  I believe the net effect of the Fed expanding its balance sheet increases asset prices and that is why I remain bullish and optimistic in the short run.             

Junk bond trend, sideways!  The junk bond average appears to be struggling as the uptrend has slowed a bit, but I am not that concerned.  I expect junk bonds to consolidate recent gains and resume trending higher even though I do not expect rates to decline.  If the economy is picking up steam, then I would expect junk bond prices to rise as they move away from “junk bond” status into a more favorable “investment grade” status.  Christmas is right around the corner and I believe the market could be gearing up for a Santa Clause Rally to erase last year’s Christmas Crash.      

Bottom line:  I believe that “Federal Reserve adjustment” is the main driving force behind the market’s new highs, and we should enjoy the ride while it lasts.  I am very bullish on the market but that could change if the market does the unexpected.  By the Grace of God, I will do my best to ride the wave and avoid life-changing loses before the wave crashes.                     


Here is a link to the latest
3rd Quarter Issachar Fund Fact Sheet

Member organizations: KA, NACFC, CIF, OSC, NAAIM and here is a podcast link to my interview on The Real FBI.       

Biblical Responsible Investing (BRI) is the term used to describe the activities of Christian investors who purposely align their investment choices to support their Christian beliefs. The Fund is ESG (Environmental Social Governance) conscious, pro-life and pro-family and will not invest in securities with a negative InspireImpact Score.     

Steady plodding brings prosperity; hasty speculation brings poverty.  Proverbs 21:5

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, Inc is not affiliated with Northern Lights Distributors, LLC.  Important Risk Information.  Mutual Funds involve risks including the possible loss of principal.  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.  If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments.  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.  If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss.  The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. Quantitative easing (QE) is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy.  NLD Review Code: 7315-NLD-12/2/2019

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Dexter Lyons