It was a rough week all around with US equities losing ~3.5% from last week’s close:
As can be seen in the above screenshot prices oscillated quite wildly in the zone between the 38.2% and 61.8% Fibonacci retracement levels at relatively high volatility levels:
The price action confirmed the break-out into a new downtrend channel that I tentatively illustrated last week. However, US Equities was not the only asset class to show poor performance:
All asset classes showed negative returns.
Reminding ourselves of current holdings:
we see ~20% allocation to Cash overall and ~35% in Tranche 2 (the focus of this week’s review) together with holdings in VTI, VNQ and TLT.
This resulted in the following performance within the portfolio:
still slightly ahead of the benchmark – but not by much.
Checking rankings and recommendations from the BHS model:
only VTI (of the assets held in Tranche 2) is a recommended Hold with no Buy recommendations.
However, since I am transitioning to a rotation model, let’s take a look at the rotation graphs:
Visually, only VTI and VNQ look anywhere near attractive – but let’s check the ranking from my new (still evolving) algorithm:
where we get the same Hold recommendation as for the BHS model. Note that only VTI is showing a positive signal in the EMA crossover (X/O) Column – that will automatically limit allocations to VTI in this rotation model (algorithm).
Consequently my adjustments this week will simply be to Sell current holdings in VNQ and TLT – and increase allocations to Cash: