Rutherford Portfolio Review (Tranche 2): 11 November 2022

Hot Air Ballooning – Arizona

Market reaction to Consumer Price Index (CPI) numbers released on Thursday, before the markets opened, resulted in a significant jump (~6%) in index prices:

Although this news has encouraged investors to get back into the market (maybe to help Santa 🙂 ), and has generated a short-term bullish channel, we are still within a longer term downtrend and at the top of a critical 1 Standard Deviation (SD) channel boundary. This is also at a (potentially) significant 50% retracement level and psychologically important 4000 (large round number) level. I still have no idea where we go from here so I will just try to follow the recommendations from the various models that I use to manage my portfolios. However, I can’t accept a shift to a bullish trend until prices close above 4325 (above the 2 SD channel and the pivot point at C).

Despite the strong performance in US equities this performance is overshadowed by performance in other asset classes:

notably real estate and developed market equities. Only Commodities generated negative returns over the past week.

For the Rutherford Portfolio I am using an experimental “rotation” model and the portfolio is “tranched” such that only 20% of the portfolio is adjusted (if necessary) every five (5) weeks. At the present time the portfolio is holding 100% Cash in all 5 tranches – therefore the portfolio has lost ground to the benchmark AOR Fund:

Let’s take a look at rankings and recommendations from the BHS momentum model:

where, despite strength in the short-term HA signals, we still have no Buy recommendations (consistent with a longer term downtrend).

Moving to the rotation model/graphs:

there is not a lot of obvious strength. But, if we move to the recommendations sheet in the workbook:

we do see Buy recommendations for VTI, VEA (US and Developed Market equities) GLD (Gold) and AOR (benchmark Fund). These Buy recommendations are triggered by the 13/49 EMA crossovers in combination with the positive HA signals. Consequently I will be using the Cash available in Tranche 2 (the focus of this week’s review) to purchase shares in these ETFs:

This is an interesting test for this new system.

David