Sunset over the Rhine River from Rudesheim, Germany
US markets took a break this week with no new all-time highs:
The SPX (S&P 500 Index) has pulled back ~1.5% to test previous highs at ~7620 and we will wait to see whether this previous resistance (now potential support) level holds and we continue in the bullish uptrend channel or whether we pullback further to test the prior support level at ~7200.
Relative to other major asset classes equities were outshone by defensive commodity markets (Gold and Oil/Energy), although Emerging Markets did show a positive return on the week:
Note that, although GDX (Gold Miners) and VTIP (Inflation protected Bonds) are not currently arrows in the Darwin quiver, they are included in the above screenshot and I may add them to the portfolio in the near future. GDX is a difficult ETF because it essentially leverages the bet on Gold (IAU) and I’m a little nervous about overdoing this – even though it may well pay off in an environment of financial repression.
My trades this week came down to adding a ~half-position in EEM (Emerging Market Equities):
such that the analysis sheet now looks like this:
where I am holding positions in all the suggested ETFs,
The momentum/Acceleration graphs for EEM look like this:
where acceleration (green line) moved into positive territory a few weeks ago and we now have momentum (blue line) crossing above its 14-period Wilder Moving Average (brown line) to suggest a possible Mean Reversal move. This is supported by positive short-term signals from the MACD and RSI Indicators.
Performance to date for the Darwin Portfolio looks like this:
where, although we missed the bullish equity market move at the beginning of the month we have caught up with the benchmark AOA fund over the past week.
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