Rutherford Portfolio Review (Tranche 1): 8 April 2022

Frigatebird, Nuevo Vallarta, Mexico

As I suggested/predicted last week (although I don’t rely on my predictions for my investment accounts) we saw a pullback in the price of US Equities over the past week:

Although we have not yet broken out of the uptrend channel as defined by the heavy Aqua (upper) and Red (lower) lines I have drawn an initial regression line (red dashed line from D3) that might indicate where we go from here. Since we are looking for “harmonic” patterns, a target price for a strong move down from here might be a 161.8% retracement of the prior D2 to D3 up-move. This would take us to ~400 (strong “round” number) and the same level as the original ABCD pattern that I had been looking for prior to the bounce from the strong support area at ~420 (D2). Of course, to get there we first have to go through a number of potential support levels at ~445 (overlapping 38.2% retracement levels), ~435 (overlapping 38.2% and 61.8% retracement levels) ~420 (overlapping 61.8% retracement levels) and 430 (50% extension from C to D (400)). and might expect to see hesitation/consolidation or small bounces from these levels. Stronger bounces would suggest the breakdown of the patterns that we have been following so we will continue to follow and evaluate as we move forward.

US equities obviously did not lead asset-class performance over the past week:

and the defensive Commodity and Gold asset classes led the list (the only asset classes generating positive returns) with Bonds showing extreme weakness.

Since the Rutherford Portfolio is ~50% invested in DBC and GLD

the portfolio is holding up pretty well:

So, we’ll check the current rankings and recommendations from the BHS model:

where we see that DBC and GLD remain the only recommended Buys.

As usual we’ll take a look at the rotation graphs:

where we see that although DBC and GLD remain the strongest performers over the longer term (position along the horizontal axis) both have lost a lot of short-term momentum (downward movement along the vertical axis).

We’ll take a look at recommendations from a rotation model:

where we see Buy recommendations for VNQ and RWX in addition to the recommendations for DBC and GLD.

Based on the above, I will sell the 85 shares of TIP held in Tranche 1 (the focus of this weeks review) and will use the funds to add shares of VNQ and RWX to the positions opened last week:

With the excess cash I will add a few more shares of GLD.

David