Market Update: 12-31-18

LYONS MARKET UPDATE – Monday, December 31, 2018 Cash is a good place to be!  I took a few short stock positions and quickly covered them as they were going in the wrong direction and the Fund ended up nearly break-even on the trade.  I believe this is a trader’s market and not an investors’ market.  I will continue to sit patiently in a money market fund waiting for the next opportunity.  If Trump cuts a trade deal with China or the Fed stating that it does not need to raise rates in 2019 then we could see the market put in a tradable bottom.  However, I believe that we are in a Bear Market (>20% decline) and we might be here for longer than the majority expect.  Listen to your God-given common sense and do what is right for you and your money.  If I am right about being in a Bear Market, then one might win simply by not losing.  If you might need your money in the next five years, then I would recommend that you do what is necessary to not take on the same risk as the last five years.  Cash is a position you should seriously consider if you have not already done so.  I may have opinions about where I think the market is headed but I rely on the charts to tell me what I should do on a daily basis.  Charts are like facts, they never lie […]

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Market Update: 12-24-18

The Issachar Fund (LIONX) is Still on Defense with 100% in Cash (money market: FIGXX)! LIONX is up 2.41% YTD with a Maximum Draw Down (MDD) of only 4.43% versus a loss of -7.87% for the S&P with an MDD of -17.12%. The S&P 500 peaked on 10/3/18 and I took LIONX to an all CASH position on 10/4/18. Since October 4th, I have been invested four times (< 2 days and < 20% each time) and have experienced a total net loss of less than 1% while the S&P has lost over 16% in the same period. Actively managing risk for the last 28 years has not been an easy task but it has provided comfort during market declines. I believe the Quantitative Easing (QE) Bull Market of the last 9-years is being replaced by a Quantitative Tightening (QT) Bear Market and “buy and hold” investors will not be happy the way QT ends. I believe global central banks have created enormous amounts of liquidity (QE) and artificially low interest rates in an effort to save us from a global collapse after the 2008 financial crisis. These same banks are now removing liquidity (QT) from the system and the stock market is feeling the pain. QE pushed stock prices far beyond their “normal” Price/Earnings (P/E) historical ranges and we are now seeing P/E multiples contract. However, they are still very stretched, so I expect more steep declines ahead. No one knows how long this […]

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Market Update: 12-17-18

LYONS MARKET UPDATE – Monday, December 17, 2018 The S&P 500 Index is down about 1%, YTD!  From January 1, 2018 to September 20, the S&P 500 was up over 11% and now has a negative return for the year.  What caused this “week” to be so “weak” and lose 1.4%?  I believe potentially higher rates by the Fed and more trade tariffs are the main culprits for the market’s decline.  Historically, the market tries to discount today what it expects in the future and when the future seems cloudy, stock prices tend to decline.  PE ratios are now contracting after many years of PE-expansion due to “easy money” policies and the market is trying to work off this “excess” daily.  If the Fed raises rates on Wednesday (as expected) and does not communicate a “dovish” (lower rates) tone of “one & done”, then a “Christmas Crash” could be in the cards.  If the Fed does not raise rates, that may indicate the Fed sees slower economic growth ahead which would likely hurt corporate earnings.  Lower expected earnings would likely cause estimates to be adjusted downward which would likely cause stock prices to decline even further.  I believe whatever action the Fed takes or does not take on Wednesday could give the market an excuse to trade lower.  I am seeing methodical and systematic distribution by institutions as they sell into the rallies the algos create.  I believe we may be headed for a “Beary” Christmas and […]

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Market Update: 12-10-18

The Issachar Fund (LIONX) is on Defense with 100% in Cash! I believe this is a trader’s market and not an investor’s market. I consider myself an investor who sometimes trades when I feel the opportunity outweighs the potential risk. I wrote the LIONX Prospectus to allow me the flexibility to be long, short or anywhere in between. I did not want to manage my money inside LIONX with one hand tied behind my back, so I designed LIONX with the ability to invest in pretty much any asset class at any time. In my opinion, market risk is high, and the S&P 500 may be headed lower to test the February lows. The S&P 500 ended Friday resting on the October 29th and November 23rd support lows, so I am expecting a bounce which might provide an opportunity to get short. This could be the worst quarter for the S&P 500 Index in 7-years, since 2011! The market seems to be concerned that the Fed will raise rates next week which could potentially cause slower economic growth leading to lower earnings and stock prices. The Fed has raised rates eight times in the last 2.5 years in an effort to tame inflation that we have yet to see. If the Fed does not raise rates next week, the market may conclude that the Fed sees economic trouble ahead and institutions may sell en masse creating fear and panic. If the Fed raises rates next […]

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Market Update: 12-03-18

The Issachar Fund (LIONX) invested in four stocks (2% each) in the Health Care and Cloud related industries on Thursday (29th) and has 92% in Cash.  If these starter positions do not perform as I expect or the market rolls over, I will not hesitate to go back to 100% Cash. Cash is Not Trash….Cash is a Position! I would rather be in Cash instead of potentially losing money. Many mutual funds are required to stay fully-invested but LIONX can go to Cash or net short at the managers discretion. I built LIONX around what I wanted for my money. My thinking was that other investors would want me to manage their money just like I manage my own money in LIONX. I tried to remove all conflicts of interest, so your best interests line up with my best interests. My focus is on our bottom line every day! The Fed hit the pause button on Wednesday! The market was discounting another ¼ point rate increase from the Fed in December. However, Fed Chair Jerome Powell eased those fears on Wednesday and the NASDAQ rallied almost 3%! The futures markets are now indicating a rate increase for December and only one ¼ point rate increase in 2019. This is in stark contrast to the three or so ¼ rate increases the futures market WAS forecasting. Obviously, the market and Trump were not pleased with the path of rate increases Powell and company were on. However, now […]

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Market Update: 11-26-18

I am patiently sitting in Cash (100%) waiting for the next opportunity. The Fund’s portfolio went to all Cash on October 4th after my sell stops were triggered and have only been lightly invested (25%) for about three days since then. I believe market risk is high, and I am more concerned with the return “of my money” instead of a return “on my money”. The S&P 500 Index is trading near its low established on 10/29/18. However, the NASDAQ is trading near it April lows, so I would not be surprised to see the S&P slide into its May lows of potential support which would be another 2% decline. The trend is certainly down, and earnings have been decelerating. I believe we are due for a bounce, so the next few days could tell us if we have found support or we could be entering into a Bear Market. I am now in the Bear camp unless some type of positive catalyst is able to establish a bottom. I believe it would take something like the Fed deciding to NOT raise rates in December or Trump cutting a Tariff deal with China to possibly stop the bleeding and turn this market around. Even that may not be enough to stop the institutional selling that I have been witnessing and that is what I am concerned about. Knowing when to get out of the market is just as important as know when to get in. […]

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Market Update: 11-19-18

I was expecting the market to head higher into the new year but now I am not so sure that we will get the widely expected Santa Clause Rally. The S&P 500, NASDAQ and Russell 2000 Indexes are all BELOW their respective 200-day moving averages (dma) except for the Dow. The Dow holds more defensive names and I am seeing big money flows out of the Techs into the presumed big names like Coke, Procter & Gamble and Mc Donald’s which populate the Dow. The Dow is showing a pennant formation that could test the highs going into Thanksgiving. However, most of the former leading stocks remain in busted patterns that may need time to heal. Many mutual funds must stay fully invested and their charts are telling me that they are trying to hide in some of the big Consumer Staple names. I don’t believe this is a healthy sign for the bulls and it might be a good time to jump in the Bear camp (short) until the Indexes can rally firmly above their 200 dma. I do not have any shorts or longs currently, but I am looking for set-ups on either side. The Junk Bond market continued its steep down-trend! I believe Junk Bonds are a good indicator of investor’s appetite for risk and the market currently seems to have a weak stomach for risk. Junk Bond prices are declining on above average volume (foot-prints) and that tells me that big […]

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Market Update: 11-12-18

The Issachar Fund (LIONX) is 25% invested as of Friday, November 9, 2018 with 75% in Cash.  Investor’s Business Daily (IBD) called the rally on Wednesday a Follow Through Day (FTD) which marks the beginning of a Confirmed Uptrend according to their CAN SLIM system.  According to an independent 12-year study by American Association of Individual Investors (AAII) from Jan. 1998 – Dec. 2009 of over 50 leading investment strategies, AAII found CAN SLIM to be the top performer.  I believe CAN SLIM is superior system because it is based on time-tested facts (not opinions) and common-sense logic that I understand and use today. On Thursday, I purchased 9 stocks (25%) exhibiting CAN SLIM fundamental and technical characteristics.  However, I do not like how the NASDAQ did not hold its 200-day moving average support and lost 1.65% on Friday.  This type of decline undermines the strength of the rally, so I stand ready to cut our losses and patiently wait for another lower risk opportunity.  I prefer to see a more rounded-bottom formation instead of the V-shaped bottom.  V-shaped bottoms tend to exhibit a higher probability of failure than slow-rounded bottoms.  I believe it would be healthy for the indexes to digest recent gains with some sideways action before launching to new highs.  Further high-volume selling would raise serious concerns that the bottom may not be in.  Bottoms are formed when demand outstrips supply, so I take my cues from the market in an effort […]

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Market Update: 11-05-18

Patience is a virtue! The Issachar Fund (LIONX) is 100% in CASH as of Friday, November 2, 2018. I believe the market will head higher into the new year and I am diligently looking for an early entry point. I have a Watch list of stocks to buy and some are setting up nicely while others still need time to form proper bases. The Healthcare, Retail Apparel and Retail Auto Parts industries look attractive at this time but a few more days are needed for confirmation. I am patiently waiting for what Investor Business Daily (IBD) calls a “Follow Through Day” (FTD) which is when a major Index closes up at least 1.25% on higher volume than the previous day. According to IBD, a FTD tends to simply confirm a new uptrend. IBD says that no bull market has ever started without an FTD but not every FTD leads to a bull market. No system is perfect but I believe IBD has one of the best time-tested systems I have seen in my 28-years of managing money. All “systems” should be monitored with good “common sense” to know when the “system” might be broken and should be abandoned. There are no guarantees in life and no one has a crystal ball which is why I remain flexible and do not subscribe to any type of buy and hold philosophy. People and systems may eventually fail you so trust your God-given Wisdom and know He is […]

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Market Update: 10-29-18

CASH is a Position! The Issachar Fund (LIONX) is 100% in CASH as of Friday, October 26, 2018. I sold the two Floating Rate Funds because I saw above average selling volume in a few Floating Rate ETFs and I did not want to risk losing money in our Floating Rate Fund positions. I am patiently building my Watch List of stocks that have performed relatively well during the recent sell off. The S&P 500 is down over 9% since 10/3/18 while LIONX is down less than 0.3% in the same period. LIONX is up 3.11% while the S&P 500 is only up 0.98% YTD. It is not about how much you make, it is more about how much you keep that counts. I believe managing risk is the key to long-term success! The S&P 500 is sitting on support and I am expecting a bounce. If the bounce fails and breaks this level of support, we could see the market test the May 3rd bottom which is about 2% lower. Fundamentally the market appears strong but technically it looks weak and corporate guidance has been tepid at best. I believe the market is trying to digest tariffs, elections, higher rates and a liquidity and credit contraction due to the Fed decreasing its balance sheet by selling bonds. In an effort to revive the economy after a near financial collapse in 2008, the Fed began aggressively buying bonds driving interest rates to near zero. In […]

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