This is the tenth update to the Tensile Trading ChartPack. When I look back at the initial version, let me just say I am astonished at how far we’ve come and how many improvements we’ve made over the past ten quarters. At this juncture, I think it’s apropos to acknowledge two parties who’ve contributed to the ChartPack’s ongoing success. First and foremost, I’d like to tip my hat to our user community, now numbering into the thousands, which continues to make excellent suggestions for enhancements.
Secondly, I’d like to recognize my son, Grayson Roze, who has come aboard with important contributions to the last few updates. He is very much his own trader even though his investing style is foundationally based on the Tensile Trading methodology. His personalized style is reflected in these recent updates, and I’m certain you’ll notice his broader orientation.
If you are already a ChartPack user, I believe you’ll find this update to be profitable. If you’re not presently a ChartPack user, I suggest you sit down with a good cup of coffee and browse the previous user manuals and quarterly updates.
I think you’ll discover many useful investment tools and organizational tips. Frankly. I think existing users can profit as well from this little exercise. Don’t overlook the free 60-minute video of my presentation to ChartCon 2104 where I take you on a guided tour of the ChartPack.
THIS QUARTER’S UPDATES
Major Sector SPDR Changes:
This happens very seldom, but the S&P folks have carved two new sectors out of the market: Real Estate Sector SPDR (XLRE) and Financial Services Sector SPDR (XLFS). Please note that although we’ve included these two new sectors in the ChartLists, they only began trading in October 2015 and their daily trading volumes are ranging between just 2,000 to 20,000 shares a day. Contrast this to the other sector SPDRs that trade 15 million to 100 million shares a day and you’ll understand why financial institutions, websites and even CNBC have not yet made the switch to the 11-sector model. We, however, wanted to get you out in front of this change.
We have therefore created two new ChartLists (410 and 411) to reflect this reality and we’ve populated both with the following:
a) A chart of the Sector SPDR itself.
b) A performance chart of the SPDR, as well as its largest individual stock holdings.
c) Individual equity charts of seven or more of the SPDR’s largest holdings.
d) A chart of an appropriate alternative ETF to the respective S&P SPDR.
In addition, each of the eleven Sector ETFs’ largest holdings were revisited, and over 50% had changes due to the recent market correction rewarding certain candidates and penalizing others. These have been reflected in the ChartLists as well.
A brief shout-out is owed to Roger Shantz, one of our veteran ChartPack community users who is a regular contributor suggesting enhancements. He made a number of suggestions that all improved the insights we users garner from these charts. For example, you’ll notice that in each of the SPDR ChartLists, the PerfCharts that plot market performance of the SPDR and its five largest holdings side-by-side have been significantly improved, thanks to Roger’s input.
This brings up three important lessons:
- This Tensile Trading ChartPack is no longer just mine alone. It is supported by a community of investors who use it regularly, making helpful and profitable suggestions for improvements to benefit all of us.
- Transparency. The ChartPack allows you to see how we have explicitly constructed each ChartList and chart layout and how we’ve applied each indicator. Use it as a personal tutorial. For example, notice how Roger recommended we plot the same indicator (SPDR) with a line as well as an area chartstyle. This results in a chart that clearly offers more visual clarity.
- The ChartPack is indeed an immense buffet with something for everyone. I encourage you to pick and choose to customize it for yourself. Use only those ChartLists that are appropriate for your investment methodology. It’s easy to jettison the charts and ChartLists that do not apply to you.
Essential Pre-Trading Questions:
Harvey Baraban and I wrote what turned out to be an extremely popular blog last year (November 18, 2015) entitled “How Two Investors Warm-Up Before Executing Any Trade.” We shared 14 key questions to ask (represented by 14 charts) before hitting the buy or sell key on your computer.
The new updated ChartPack has these charts now included in ChartList 10.5 that’s been renamed as “SuperList / Essential Pre-Trading Questions.” Some of the charts already resided in the ChartList, but nine additional charts were added and the other five were updated.
Check out the improved visual presentation on Chart 3.7 in the 10.3 ChartList. The technique of plotting the same symbol using both an area chart, as well as a line chart, renders insights more clearly. I’d encourage you to consider where else you might wish to utilize this approach to charting.
ChartList 205 – Country Funds:
This ChartList contains equities of 55 country funds, with many being classified as Emerging Market economies. We have added a new chart at the top of the ChartList that shows how Vanguard’s Emerging Markets VIPER (VWO) has performed historically versus the US dollar ($USD). You’ll note that, for a whole host of reasons, these emerging market economies have not fared well in an environment where the dollar is strengthening.
Having said that, this ChartList is fertile ground for more active investors. The emphasis is on active. It seems there are always profitable opportunities somewhere in the world. For example, both the Japan Small Cap Fund (SCJ) and the Belgium Fund (EWK) are up over 5% in the past year in a pretty dreadful general market (as of January 11, 2016).
Fidelity Select Funds – This Quarter’s Buys and Sells:
Over these past ten quarters, we have executed some extraordinary trades based on our quarterly analysis of Fidelity’s buys and sells. We should all be willing to admit that this analysis has also yielded a unique education into the details and specifics pertaining to the execution of the buying campaigns and selling campaigns of big institutions. Sort of a PhD in trading tactics.
As I’ve done so often in the past, I’d like to remind investors that the insights garnered from specific equities accumulations or distributions does not required one to buy individual stocks. For example, if you like the setups of equities purchased in the Fidelity Select Consumer Staples Portfolio (FDFAX) by their portfolio manager, consider buying the fund versus individual equities.
Having said that, you should also now consider possibly buying the ETF alternative, such as Fidelity MSCI Consumer Staples (FSTA) which has an expense ratio of only 0.12% versus the similar sector fund (0.77%). Over the past two years, FSTA has actually outperformed FDFAX.
Not to throw a fly in the ointment, but you must look at these on a case-by-case basis. Do not assume that ETFs always win. Conversely, for example, Fidelity Select Health Care (FSPHX) has outperformed its ETF counterpart Fidelity MSCI Health Care (FHLC) over the past two years.
As with all other asset classes, investors deciding the best options must always ask themselves if the active managers’ alpha (i.e. outperformance) justifies their higher fees versus the passively managed ETF’s. In my own asset allocation profile, it’s about 50/50. Fifty percent are passive ETFs and fifty percent are actively managed funds that clearly do outperform their benchmarks.
Lastly, I’d be remiss if I did not remind investors that the Fidelity Select Funds are not intended for active traders since they do carry a 0.75% short-term redemption fee if you sell within 30 days. For active traders, the ETFs are the best option. Having said that, these funds can outperform the markets for healthy periods of time and can put handsome profits in your pockets. Check out the following:
FPHAX: August 2014 to August 2015
FSRPX: August 2014 to August 2015
FSPHX: May 2014 to July 2015
FSPTX: January 2015 to June 2015
FSELX: October 2014 to March 2015
FBIOX: May 2014 to July 2015
FSCPX: October 2014 to April 2015
A Few Specific Notes about the Fidelity Select Funds:
- Our list of Fidelity Select Funds in the ChartPack grew this quarter as we added the Telecom and Utilities Fund (FIUIX).
- With so much attention turned to the Fed throughout Quarters 3 and 4, the Financial Sector has been an interesting one to watch recently. The Brokerage and Investment Management Fund (FSLBX) saw substantial changes to its top ten holdings last quarter, with five stocks entering that list and another five leaving it.
- The Defense and Aerospace Portfolio (FSDAX) added significant positions in two big name Defense stocks, neither of which were part of the fund’s top ten holdings in Q3.
- The Insurance Portfolio (FSPCX) saw the first change to its top ten holdings in multiple quarters, adding a major position in Chubb (CB).
- Always an exciting fund, the Technology Portfolio (FSPTX) had some interesting changes in its top ten holdings with three new additions. Also worth noting, it dropped a popular automobile stock that it had added to its list of ten just last quarter. Yep, you read that correctly. An automobile stock in the Technology fund. In case you didn’t know, Fidelity Select Portfolio managers are allowed to invest a surprisingly large percentage of their fund’s capital outside the primary industry.
UPGRADE INSTRUCTIONS FOR EXISTING CHARTPACK USERS:
Important: If you have modified any of the charts in any of the ChartLists that start with “GR - ”, those changes will be deleted as part of the upgrade process. If you want to keep those changes, you need to copy those charts into a different non-"GR" ChartList before you upgrade!
To Upgrade the Tensile Trading ChartPack, follow these steps:
1. Log in to your account and then click on the "Your Account" link in the upper right corner of the web page.
2. Scroll down and find the "ChartPacks" area towards the bottom of that page.
3. Find the entry for the "Tensile Trading" ChartPack in the table that appears. (If you don't see it, that means that you didn't purchase it - click here to purchase it.)
4. Click on the "Re-Install" button next to the Tensile Trading ChartPack to start the reinstall process.
The download should take about 15 seconds. At that point, you can explore the new ChartLists and updates.
INSTALLATION INSTRUCTIONS FOR NEW CHARTPACK USERS:
If you are new and would like to add the Tensile Trading ChartPack to your StockCharts account, please Click HERE to get started.
Trade well; trade with discipline!
-- Gatis Roze, MBA, CMT
-- Grayson Roze
Presenter of the Tensile Trading DVD, Stock Market Mastery.
Developer of the StockCharts.com Tensile Trading ChartPack.
P.S. Click HERE for information on my future appearances & seminars.