Rutherford Portfolio Review (Tranche 3): 9 September 2022

Head in the Clouds above Cape Town, South Africa, from the top of Table Mountain.

Even in a shortened 4-day trading week US equities managed to gain ~4% from last week’s close:

The big surprise came on Friday when we gapped up on the Open and kept going from there. In the above figure I have drawn a tentative breakout channel from the recent downtrend. There is still a lot of potential resistance in this area including the 50- and 100-day simple moving averages (heavy dashed lines). We’ll see where we go from here.

Compared to the performance of other asset classes:

US equities sits near the top of the list with Bonds showing weakness.

In terms of the implications for the Rutherford Portfolio:

we see that we are still matching the performance of the benchmark AOR Fund.

Current holdings are looking like this:

with Tranche 3 (the focus of this weeks review) holding shares in VTI, VNQ, TLT and AOR.

Checking current rankings and recommendations from the BHS model:

we see Hold recommendations for VTI and AOR and Sell recommendations for all other ETFs. Surprisingly, even after a bullish week in the markets we are still not seeing significant positivity in the short-term HA signals.

Checking the rotation graphs:

we see VTI and VNQ in the favorable top right quadrant but these seem to be rolling over and weakening.

Recommendations from the Rotation Model look like this:

with Sell recommendations for all assets. The significant observation here is that the 13-day EMA is lying below the 49-day EMA for all ETFs (X/O Column) that will automatically generate a Sell signal for this Model.

Although this is a little anti-intuitive based on last week’s strength I will continue to follow the recommendations of this model and move to Cash:

This will leave me holding ~50% in Cash.

David