Rutherford Portfolio Review (Tranche 2): 20 May 2022

Dunn’s River Falls, Jamaica

It was another down week in US Equities with the S&P 500 Index closing down ~5% on the week despite trying to bounce off the 400 support level at the beginning of the week:

We have now seen a 20% drop from the highs at the beginning of the year and are trying to decide whether this (380 SPY) level – a 127% Fibonacci extension level of the AB move from C (or D3) – will provide more solid support. This level is also a 200% retracement of the BC bounce. If not, and we continue down the bearish channel that we have been in for the past ~7 weeks, the next potential support level might be ~360 – a 161.8% Fibonacci “golden ratio” level.

Put into perspective with other asset classes:

we see US equities at the bottom of the list – and no obvious correlation/anti-correlation between this and other equity or bond markets.

Tranche 2 of the Rutherford Portfolio (the focus of this week’s review) is holding positions in VNQ, RWX, DBC and GLD:

and has held up reasonably well, remaining ahead of the benchmark AOR Fund:

Checking recommendations from the BHS model:

we see recommended Buy or Hold suggestions for DBC and GLD but Sell recommendations for everything else. Only RWX is showing short-term strength so we should keep our eyes on this.

Taking a look at rotations:

we see the continued clockwise rotation from the top right quadrant into the bottom right quadrant and a general drift weaker (right to left) in long-term momentum. Even SHY is looking strong on a relative strength basis.

The rotation model:

is only offering DBC as a Buy recommendation – so I will be selling VNQ and RWX (did consider holding RWX but chose to stick with the system) and moving a portion of Tranche 2 funds to Cash:

We’ll see what next week brings.

David