The Issachar Fund holds about 10% in a short/inverse Treasury Bond fund ETF, 12% in a Gold ETF, 1% each in a NASDAQ and S&P 500 Index short/inverse ETF, and 76% in a high-yielding short-term fixed-income ETF! The indexes had an oversold short-covering rally after the Fed did not raise rates following Wednesday’s two-day meeting. Short-covering or a short-squeeze is when investors who were betting prices would go lower get “squeezed” into covering their shorts, forcing them to buy borrowed shares previously sold. The more short sellers are forced to cover their positions, the higher prices rise. The “short squeeze” has run its course, and the market may head lower this week. The market assumes the Fed may be done raising rates in 2023 and may have to lower rates in 2024. I believe rates and inflation will stay higher for longer, so I remain short stocks and bonds. However, gold is my highest conviction trade! (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The dollar has rolled over, and gold is poised to run! The dollar is down about -1.4% since peaking on 11/1/23, which could be good for gold since they are historically inversely correlated. Since gold is traded in dollars, it will now take more dollars to buy the same amount of gold than it did just four days ago. Gold has been holding steady, under accumulation, in price over the last two weeks, while stocks and bonds have seen more volatility. If the dollar declines because fewer central banks convert their currencies for dollars due to an expanded war, we could see the dollar weaken further, especially if the market expects the Fed to pause its rate-raising campaign to bring inflation near its 2% target. Gold could be ready to rally higher if the dollar continues to weaken.
The Fed sold another $41 billion of bonds last week! The more bonds the Fed sells, the higher rates and inflation rise. The Fed says it wants to bring inflation down by not raising the Fed Funds Rate that banks charge each other for overnight loans, but they continue to sell bonds from its massive $7.8 trillion balance, causing longer-term rates to rise. The Fed earns interest on money it creates out of thin air, pays over 400 Ph.D. economists to manage inflation, and gives back to the Treasury whatever is left. Does this sound like a Ponzi Scheme?
Bottom line: The S&P 500 and NASDAQ indexes have rallied over the last five days into their 50-day moving averages of resistance, so I expect the market to digest gains. If the market continues to rally, I plan to cover my shorts. I believe rates and inflation are headed higher for longer, and I see no potential policy changes. God gives everyone the freedom to choose good or evil, and it seems that evil is winning. However, God is Love, and Love Trumps All. Grace and Peace to Everyone!
Hatred stirs up strife, but love covers all offenses. Proverbs 10:12
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., a member of 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. 3531-NLD-11/06/2023