A bad week for US equities with a 3.8% weekly decline in prices:
Most of the damage came on Friday following announcements from the Jackson Hole Economic Conference and we have tentatively broken through the lower boundary of the recent bullish channel. I have drawn the boundaries of a potential new downtrend channel but this may well be a little premature – we will have to wait to see what happens next week. We are presently sitting at the bottom of the uptrend channel and at a 38.2% Fibonacci retracement of the upswing to the recent ~$432 high. Should the downtrend continue I might expect to see support at ~$395.
In terms of relative performance across asset classes:
US equities suffered more than most with Commodities leading as they did last week.
Current holdings in the Rutherford Portfolio look like this:
with Tranche 1 (the focus of this week’s review) only 25% invested in AOR, the benchmark fund, with the balance in Cash. Checking on performance of the portfolio:
we are managing to stay slightly ahead of the benchmark with Tranche 1 benefitting last week from the high allocation to Cash and being out of the markets.
We’ll check current rankings and recommendations from the BHS model:
where we only see a Hold recommendation for TLT – that we are not holding in Tranche 1. Despite the strong performance of DBC over the past 2 weeks and a significant amount of green showing on the DBC line in the above screenshot the longer term momentum is taking time to turn around and generate a Buy recommendation.
Let’s check the rotation graphs:
where we can see why there isn’t a lot of enthusiasm for DBC. VTI and VNQ look the most promising here so we’ll check the recommendations from a rotation model:
where we see that we are still not getting any Buy recommendations – just a recommendation to hold the shares currently held in AOR.
I am going to follow the recommendations of this model – which means that there will be no adjustments to the portfolio this week.