Rutherford Portfolio Review (Tranche 3): 27 May 2022

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Well, that was quite a week in US equity markets with the S&P 500 Index closing the week 6.6% higher than last week’s close:

Prices have broken out of the downtrend channel and Implied Volatility has decreased significantly (over 30% from the recent highs). We are now sitting at ~415 in SPY that is the level of the mid-March pivot low (B) and potential resistance to moves from below. Next week we will see whether the breakout is just a head-fake (maybe caused by short covering) and whether 415 will present resistance and we see a retreat in prices, or whether we will break through and confirm a change to a new bullish trend after the “official” 20% pullback of the recent bearish trend.

Checking the performance of other asset classes over the last week:

we see that it was just about impossible to lose money being long in any market.

So, how did the Rutherford Portfolio perform:

Even though we have moved some money to Cash over the past 2 weeks (in Tranches 1 and 2) the portfolio performed pretty well in line with the benchmark AOR fund.

Checking current holdings:

we see that we are holding positions in VNQ, DBC, GLD and AOR in Tranche 3 (the focus of this week’s review). So we’ll check rankings and recommendations from the BHS model:

where we see Buy recommendations for DBC and GLD that have been the recommendations for a few months. So, we check rotations to see whether this gives us any additional insights:

DBC is excluded from the above figure (it lies off the chart, well to the right) so that we can see the relative positioning of the other assets in more detail. Nothing really stands out here other, perhaps, than the relative strength of SHY – that we know doesn’t do very much, but everything’s relative.

This makes it a little difficult to decide what to do this week – but, for the sake of completeness we’ll check the recommendations of a rotation model:

that still doesn’t help us much – only confirming the relative strength of commodities.

Since I have moved a little money to Cash over the past 2 weeks I think that I will save a little in trading costs and leave things as they are in Tranche 3 – i.e. in addition to continue to hold positions in DBC and GLD, rather than move more money to Cash I will hold on to the current positions in VNQ (Real Estate) and AOR (Benchmark equity/bond fund) so as to maintain diversification until we see a better defined trend.

We’ll check again next week.

David