Rutherford Portfolio Review (Tranche 3): 19 April 2024

It’s cold out there – but that doen’t stop the serious fisherman!

It was another bad week for US Equities with indices down ~3% on the week and now down over 5.5% from the highs at the beginning of the month.

It may be a little early to be drawing bearish channels. but since we closed outside the bullish channel last week and have seen a continuation of the pullback (defined as a 5-10% move in the opposite direction) I have added a tentative channel to the chart. For what it’s worth we are now sitting at a 23.6% Fibonnaci retracement of the bullish upmove from November 2023. This isn’t considered a particularly strong potential support level but sometimes does show a little hesitation in price movement. Stronger potential support levels are at the 38.2%, 50% and 61.8% marks, or ~4800, 4700 and 4550 price levels. A “correction” in trend is commonly defined as a 10-20% change in direction of price movement – that would be somewhere below the 38.2% retracement level.

In terms of relative performance US equities closed the week close to the bottom of the list with only Gold (GLD) showing positive returns:

Current holdings in the Rutherford Portfolio look like this:

with Gold being well represented as we have been rotating into that asset class over the past few weeks.

This has resulted in the following performance:

where we see a narrowing of the gap between the Rutherford portfolio and the benchmark even though both are in a pullback.

But let’s check on the rotation graphs:

where we get confirmation of the strength in GLD. DBC is still sitting in that desirable top right quadrant but has shown a little short-term weakening recently. So we’ll move to the ranking sheet to check current recommendations:

Here we see a warning sign with only GLD being a recommended BUY and Sell recommendations for all other assets. DBC is borderline and, if using 5- and 8-day Heikin-Ashi (HA) signals would also show a Buy ecommendation. I am tempted, but I will show a little discipline and stick with 3- and 5-day settings that result in adjustments to Tranche 3 (the focus of this week’s review) that look something like this:

i.e. I shall be selling current holdings in VTI, VEA and PCY and using the cash generated to open a position in AOR (the benchmark fund). Although AOR shows as a Sell in the ranking sheet momentum/relative strength is showing as stronger than BIL (short-term T-Bills as a proxy for Cash) and so I will go with AOR over BIL in the event that we get a bounce from here. At least we won’t lose out to the benchmark if the decline continues 🙂 . I will not be reducing my holdings in GLD.