The Traders Journal

ChartPack Quarterly Update: Over 150 Improvements (v 8.5)

This ChartPack update is chock full of enhancements as a direct result of spending a week in Napa Valley with all the sensational commentators and luminaries at ChartCon 2016.  We confess that we have unabashedly incorporated a lot of their wisdom into improving our ChartPack.  We are sure you’ll notice and approve.

Before we go there, a few general thoughts on the ChartPack.  Even I myself am astonished to realize that I’ve been personally investing using the first version of this ChartPack now for over 15 years.  In 2010, I began distributing versions to my seminar students.  Since 2013, we have made it available to all StockCharts.com subscribers.  The markets are messy by nature.  Some investors never manage to organize the mess.  ChartPack users have a tool to make it un-messy.  My point is that with a user community numbering in the thousands, we investors have all benefited and profited immensely.


With this update, I thought I’d share my own examples of how the ChartPack has contributed to my own bottom line. 

  1. I’m living proof of this quote from Michael Dell, “you don’t have to be a genius to be successful.  You just need a framework.”  The ChartPack is one heck of a powerful framework. 
  2. My life’s most precious commodity is my time.  The ChartPack has maximized my analysis while minimizing my time.  For that, I am eternally grateful.
  3. We are a global community of visual investors.  So many user recommendations have contributed to the creation of colorful, fun and truly impactful new chart formats that must make fundamentalists weep with envy.
  4. As a professional trader, I have bettered myself  by sharing my methodology with the world in a transparent manner and having it critiqued and enhanced by so many of my peers.  I’ve profited by sharing.

Those are a few of my observations.  Here are some examples of user comments.

  • “The organization and clarity had an immediate positive impact on my investing.”
  • “Now that I use it, I realize it would have taken me years to get here — if ever.”
  • “I wish I had this 10 years ago.”
  • “Amazing!  I see it first in the ChartPack charts and then eventually I read about it in the press.”
  • “It doubled my market insights in half the time.”
  • “With the quarterly updates, it just keeps getting better and better.”
  • “It’s really helped me get so much more out of my StockCharts.com account.”
  • “As an investor, I’ve moved up another tier and I’m making money.”
  • “The ChartPack finally helped me make sense of all my ChartLists, indicators and ticker symbols.”
  • “The layouts for market breadth and S&P earnings charts are so unique and so effective.  I would never have come up with them on my own.”
  • “Thank you for doing all the heavy lifting.  These pre-populated ChartLists are a godsend.”
  • “I combined the ChartPack with insights from your Tensile Trading book, and I’m beyond pleased with the results.”
  • “The quarterly listing of Fidelity’s buys and sells is a pure cash cow.  Amazing stuff.”

A few final comments before I describe some of this quarter’s enhancements.  Please note that the updates do not automatically show up in your ChartLists.  You must initiate the download at your end.  Updates are free for 12 months from your ChartPack subscription, and then you can decide the frequency of future updates.  I’d like to suggest that first time users watch the video of my presentation at ChartCon 2014 where I describe the ChartPack in detail.  

Users should approach the ChartPack as a buffet.  Keep on your plate only those ChartLists that appeal to you.  If you don’t trade country funds, then you should delete that particular ChartList.  Onward!  Here are some of the key enhancements this quarter.

Intermarket Analysis:
During ChartCon 2016, I spent a few days with John Murphy who is the undisputed global authority on Intermarket Analysis.  From our discussions, I came away with a number of enhancements to ChartList GR-320.  As John explained, intermarket analysis can be layered atop any methodology and can contribute valuable insights when executing said approach.  Note the clear inverse correlations between the commodity index and the US dollar in the new chart.  Another chart shows the inverse correlations between the US dollar and emerging markets (EEM).  The next chart shows a positive correlation (although rather volatile) between emerging markets and the CRB Index (commodities).

We added a chart that plots two major resource-based economies against the CRB Index.  You’ll see that clearly both Australia and Canada’s currencies are closely correlated to the CRB.  Generally, the price of oil strengthening is good for these countries.  John Murphy said something profound to me.  “Young men learn the rules.  Old men learn the exceptions.”  Wonderful insight!

John also made a good point that when you buy foreign stocks, you are also buying into their currency trend.  Therefore, hedging makes sense.  We’ve included a chart of the Japanese Yen ($XJY) overlaid with the Japanese stock market to show this relationship.  A falling yen is good for the Japanese stock market.

NOTE:  On these charts and other ChartLists as well, don’t forget to notice our helpful comments below many of the chart formats.

Permission to Buy:
The popular Permission to Buy ChartLists also have some enhancements.  The Growth vs Value Chart (2.2) now plots a ratio of Russell 2000 Growth ETF (IWO) to the Russell 2000 Value ETF (IWN).  When the market is favoring growth stocks over value stocks, this ratio line is trending up.  When value is in vogue, this ratio line trends down.  Visually, it’s very clear.  Also, the Mergers and Acquisitions chart (4.0) has been improved to more clearly illustrate confirmations in rising markets or divergencies as a market timing tool. 

10.5 SuperList:  Revised Bullish vs Defensive Chart
This new chart replaces the old version.  When the market is in a bullish mood, leadership is taken up by the technology (XLK) and Consumer Discretionary (XLY) Sectors  which are both plotted here in green.  When the market mood turns defensive, leadership tends to rotate towards Consumer Staples (XLP) and Utilities (XLU), plotted here in yellow/gold.  The S*P 500 is plotted in black.  The visual presentation is improved, with the conclusion more vivid and clear. 

10.5 SuperList:
By popular demand, we have added a chart based on the work of Charles H. Dow who was not only the founder of Dow Jones & Co. but also the first editor of the Wall Street Journal.  His work based on the hundreds of editorials he wrote came to be known as the Dow Theory.  The logic being that if manufacturers’ profits are to go up, they must not just  produce more goods but must ship more goods as well.   As investors look for signs of a healthy economy and therefore a profitable stock market uptrend, they should ascertain if the Dow Industrials Index uptrend is confirmed by the Dow Transportation Index. 

On our updated Dow Theory chart, we included not only the Dow Industrials Index but the Dow Transports Index, as well as the four Dow transportation industry groups which are rails, trucking, air freight and airlines. 

There has been renewed interest in the Dow Theory since Jack Schannep presented his research to the Market Technicians Association that showed Dow Theory produced an excess return of 1.5% per year (from 1953 thru 2011) versus a buy and hold strategy.  His presentation attracted a whole new generation of Dow Theory enthusiasts.  

105 ETF Master Watchlist:
This is worthy of your attention each quarter.  The shifts here are “Big Wave” type of money flows.  This ChartList contains a bit over 100 ETFs that are included based on their trading volume and assets.  This quarter we’ve added over a dozen ETFs which qualify because their trading volume relative to their peers places them in the top 100 of all ETFs.  

It’s not surprising that iShares Core MSCI Emerging Markets (IEMG) is in the top 30 of all ETS.  Similarly, you’ll find additions such as Vanguard Small Cap Index (VB) and Russell Madcap (IWR) which clearly reflects recent money flow trends.  I strongly encourage you to take a look at this ChartList each week for insights as to where the big money is flowing.  We’ve also added VOO, IWB, VYM, VO, VCSH, USMV, IEFA, CSJ, VGK, RSP and VGT this quarter based on popularity and trading volumes.

Fidelity Select Portfolio Funds (ChartLists 420 through 420-90):
Last quarter, we made an exciting new update to the Fidelity Select Portfolios section of the Tensile Trading ChartPack.  In addition to carefully recording the stocks that move into and fall out of each fund’s top ten holdings every quarter, we are also now recording the total number of holdings for each Fidelity Select Portfolio fund.  From quarter to quarter, this allows us to not only consider the total number of positions held by the fund, but also to look at the changes to that number over time.

For example, this past quarter we saw a few specific funds add a significant number of new positions.  The team managing the Technology Portfolio, for example, was clearly in the buying spirit.  That fund saw its total holdings jump from 231 to 262 positions.  It now holds more open positions than any other Fidelity Select Portfolio (it surpassed Biotech this past quarter, which holds 245 positions).  Technology has been a leading sector this past quarter, so this sort of accumulation by some big money players at Fidelity makes sense.

Alongside the Technology Portfolio, we saw the Electronics fund, the Environment/Alternative Energy fund and the Industrials fund add significant numbers of new positions to their respective portfolios.

In addition to the total holdings observations, here are some interesting notes from the latest quarter’s updates:

  • The Air Transport Portfolio saw a long-time holding, Spirit Airlines (SAVE), drop out of its top ten list.  Instead, that stock was replaced by another major airline.  The fund also saw JetBlue claim a spot in the top ten.
  • The Brokerage / Investment Management Portfolio made a very unique move this past quarter, dropping E*Trade, T.Rowe Price and Virtu Financial in favor of some large positions in three publicly-traded exchanges (yep, you read that right).  None of those stocks were top ten holdings of the fund last quarter, and this is a very curious move.  The Financial sector as a whole is certainly in somewhat uncharted waters here with the low interest rate environment and continued Fed drama, but this is an interesting move to say the least.
  • The Energy fund took a very big position in Exxon this past quarter.  That stock has now jumped to become the third largest position for the fund despite being absent from the top ten list just three months ago.
  • Multiple energy-related portfolios also added positions in the same major exploration and production firm that has seen very strong performance in the past few months.  Lots of accumulation by the big money managers has undoubtedly helped that stock climb this past quarter.
  • Lastly, the Wireless Portfolio made some strange moves, shifting away from a few large cap household names including Alphabet (GOOGL), and instead investing heavily in some relative unknowns (at least here in the US).  The fund took sizable positions in VimpelCom (VIP), Telefonica (TEF), and two separate classes of a Netherlands-based telecom company that trades on the Euronext Exchange.

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

 

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