Rutherford Portfolio Review (Tranche 1): 19 November 2021

St. Stephen’s Cathedral, Vienna

We spent the week consolidating near the all-time highs in the SPX (S&P 500 Index) without actually reaching new highs:

Some technicians might see a double or even triple top here but I only really see a 2 week sideways consolidation.  Where we go from here we’ll have to wait to see.  We have pulled outside the regression channel but not the trend channel defined by higher highs and higher lows.  This should come (either to the upside or downside) on Tuesday or Wednesday next week.

We’ll check on how U.S. Equities performed compared with other asset classes last week:

and see that, despite showing negative returns, they finished close to the top on a relative basis.

Next we check to see how this affected the performance of the Rutherford portfolio:

and see that we lost a little ground in weak markets for all asset classes.

Checking current holdings:

we see that Tranche 1 (the focus of this week’s review) is holding shares in VTI, VNQ, DBC and AOR.

So, we’ll take a look at current rankings and recommendations from the BHS model:

and see that VTI and DBC are the only Buy or Hold recommendations as they have been for the past few weeks.

Rotation graphs are showing the following picture:

with DBC being the big mover – although in the wrong direction in the short term despite it’s longer term relative strength.

Focusing on the “rest of the field”:

we see good performance in VTI, stagnation in VNQ (Real Estate) and sneaky increasing strength in GLD (Gold).

If we look at recommendations from a rotation model we see the following suggestions:

with Buy recommendations for VTI, VNQ, GLD and AOR.

Before making a final decision I will take a look at the Heikin-Ashi graphs for DBC, GLD and AOR:

where I see the best relative strength in GLD and AOR. Accordingly I will adjust the portfolio (Tranche 1) as follows:

i.e I will sell holdings in DBC and replace with shares in GLD.  I will keep the shares held in the benchmark AOR fund until we see where the markets go from here.

David