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 everyone seems to be content with a slowing (dovish) of rate increases. It could be argued that Trump had his foot on the gas while Powell had his foot on the brakes and the market was confused. The market may have just put in an under-cut and rally bottom that will allow money to flow back into the market from a few defensive areas. My fingers and toes are crossed as I keep building my Watch List of potential new market leaders.

Investor’s Business Daily (IBD) declared Wednesday’s rally a Follow-Through Day (FTD) indicating, what could be considered, a “green light” for investors. However, the last FTD (Nov. 7) failed on Nov. 20th as the NASDAQ under-cut its Oct. 29 lows. IBD says that every market bottom has a follow-through but not all follow-throughs result in lasting advances.

He said She (Xi) said: 90-Day Trade War Cease-Fire with China! Trump signed a new trade deal with Mexico and Canada to abolish the seemingly unfair practices of the NAFTA agreement on Saturday. It has to get approval from the House and the new Democratic majority will likely veto it in early 2019. Also, at the G-20 Summit Trump and Chinese President Xi Jinping agreed to a 90-day delay of the January 1st tariffs of 25% (from 10%) on $200 billion of Chinese imports and avoid escalating the China trade war. This 90-day truce should provide a short-term boost for the US and Chinese stock markets. I cannot imagine Trump wanting to start a “Cold War” with China. A Cold War would likely hurt Trump’s 2020 re-election chances especially if we go into a recession or should we experience rising unemployment due to higher tariffs. I believe Trump is a very smart business man and he likes to win. I expect him to do what is necessary to put America in a position that will allow him to serve eight years as President.

The market is eager to put out the Cookies and Milk for Santa! However, we are late in this 9-year bull market that is extended and choppy to say the least. The Junk Bond market is telling me that risk is still high as junk bonds continue to trade below their down-trending 50-day moving average. Gas prices at the pump have declined dramatically and that keeps more money in the pockets of consumers to spend on Santa. My best guess is that we may rally into the New Year, but I will follow charts and let the market “show me the money!

Bottom Line: I am mildly invested looking to add more positions should I get confirmation that this rally has legs to stand on. I continue to build a Ready list of Leading stocks in Leading industries that I believe are poised to break out of sound base patterns. However, I would rather miss an opportunity than lose money, so I am prone to error on the side of caution.

(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.)

My Heart-Felt Prayers go out to the Bush Family in the loss of our 41st President George H.W. Bush who passed away at the age of 94. A great man who served and finished well! Markets will be closed on Wednesday for a National Day of Mourning.

Health Tip:
Sugary drinks are among the most fattening things you can put into your body.

Inspirational Quote:
The best and most beautiful things in the world cannot be seen or even touched – they must be felt with the heart.

Verse of the Day:
For the wages of sin is death, but the gift of God is eternal life in Christ Jesus our Lord. Romans 6:23

The chart below shows the YTD total return of LIONX (red) verses S&P 500 (green). I believe that managing risk is the key to long-term success. Past performance is no guarantee of future results.