The Traders Journal

Tensile Trading ChartPack Update (Q4.2016) 150 Potent Enhancements plus Fidelity's Fresh Quarterly Buys and Sells

Holistic is most commonly heard in reference to skilled medical practitioners who treat the whole person, considering not only the physical symptoms of patients but mental, emotional and social factors as well.  Holistic is also the perfect adjective to describe skilled investors.  They appreciate the fact that the numerous parts of the stock market are intimately interconnected, and they are fully aware that investors must comprehend these dependencies to understand and profit from the whole.  

The ChartPack is precisely this — a holistic investment tool.  I personally use it daily in all my investing activities and have done so for over 15 years.  Since I first made it available to my students in 2011 and to StockCharts.com subscribers in 2013, the ChartPack user community has grown exponentially and contributed hundreds of improvements to the package we all now use.  


The essential fuel that drives the investing engine is discipline and carefully designed routines.  It is these routines that take decades to get right.  It is precisely these routines that are assembled for you into the Tensile Trading ChartPack which consists of 96 transparent ChartLists.  Here are eleven examples.

  1. To ascertain the market’s trend, use CharList 10.1 — Permission to Buy.
  2. To ascertain whether the market is favoring Big-Caps, Mid-Caps, Small-Caps, Value Stocks, International or US Equities, use ChartList 102 — Allocations.
  3. For detailed breadth, volume and volatility insights, use ChartList 10.3.
  4. For a Permission to Sell dashboard, use ChartList 10.4 to 10.13 — Long Term Indicators and Charts.
  5. For a super-list of 28 essential pre-trading questions, use ChartList 10.5.  Contributors here include many well-known investors.
  6. For a ChartList of 18 preformatted sample chart styles with optimized moving averages for different classes, use ChartList 10.9.
  7. For a group of over 100 of the most recently top-rated (by third parties) and highest volume traded ETFs, check out ChartList 105.
  8. For in-depth analysis of all the Sectors, see ChartLists 400 through 411.
  9. For in-depth analysis of all 41 Fidelity Select Sector Funds, including their most recent top-ten holdings, their most recent quarterly equity buys and the equities they’ve sold in the past quarter, go to Chartists 420-0 through 420-90.
  10. Preformatted and labelled charts for the 109 Dow Jones US Industry Groups can be found in ChartList 450.
  11. Suggested sample organizational ChartLists for stalking, buying, monitoring and selling your equities (plus ETFs and Mutual Funds) can be found in ChartLists 500 through 780.

THIS QUARTER’S ENHANCEMENTS

10.45  Market Tops  & Market Bottoms:  1981 to Present
In my own investing, I find myself gravitating back to this ChartList on a regular basis.  I would remind existing ChartPack users of the powerful visual lessons history shares with us here.  For new investors, just trust me when I tell you that the insights packed into these historical charts will help you negate the claims by neophyte journalists when they invariably claim “but it’s different this time.”

10.5  Superlist / Essential Pre-Trading Questions
We have added Chart 1.15  4.3 Inflation or Deflation.  By plotting an inflation index in ratio to a deflation index, we can easily see which environment we are presently operating in.  Is the market suggesting inflation or deflation?

These are indexes where !PRII is a grouping of companies that generally benefit from rising prices while !PRDI is an index of deflationary sensitive stocks such as banks, insurers & utilities.
A RISING ratio is inflationary while a declining one indicates a deflationary environment.

10.9   Chart Styles
I would encourage all users to revisit this ChartList.  The collection of preformatted charts in this ChartList begins with a layout for one-minute, one-day charts and progresses from there.  Any of these chart styles can be easily customized for your eye and can be saved as convenient custom ‘buttons’ on the left column of your own screen for quick access anytime..  

This quarter, we’ve added five charts with optimized moving averages.  One chart for each of the following: Indexes, Sectors, Industries, Stocks and Mutual Funds.  One size definitely does not fit all when it comes to moving averages.

The unique personalities of price movements within each of the five groupings varies considerably .  You’ll notice that the appropriate moving averages reflect this reality.  Each chart has three moving averages.  The shortest duration is always an exponential moving average to increase reaction time and decrease lag.  The other two are simple moving averages.

Please note that in our charts, data is daily prices.  If you look at longer term charts and use weekly data, the moving averages will use this new data to plot 50-week moving averages.

105   ETF Master Watchlist
One of the top equity ratings firms for stocks and mutual funds has just initiated  their ratings for ETFs.  They have assigned analysts to 21 Asset Classes, and within those groups they’ve ranked and rated as may as 16 individual ETFs in each asset class.

With the immense proliferation of ETFs, it’s become a somewhat challenging universe of options.  It is exciting news indeed that a blue-chip investment research firm has filtered and sorted through this entire galaxy and offered us the best-of-the-best ETFs.

  • Large Value
  • Large Blend
  • Foreign Large Blend
  • Large Growth
  • Mid-Cap Blend
  • Diversified Emerging Markets
  • Europe Stock
  • Mid-Cap Value
  • Intermediate-Term Bond
  • Small Blend
  • Small Value
  • Mid-Cap Growth
  • Short Term Bond
  • Small Growth
  • World Stock
  • Corporate Bond
  • Foreign Large Value
  • Foreign Small / Mid Blend
  • High Yield Bond
  • Real Estate
  • World Bond

We have annotated each rated ETF in our own Master Watchlist by adding “R&R” to the chart’s name.   Let’s take an  example, (VYM) Vanguard High Dividend Yield — R&R.  ChartList users would therefore know three things about this ETF:

  1. This ETF has been deemed to be one of the best.
  2. It has been ranked and rated (R&R), and there is more information existing online
  3. All first and second tier ranked ETFs are included (as of December 2016 rating data) regardless of trading volume.  Lower tiered rated ETFs are also included if their volume justifies it.

ETFs included in our ChartList 105 in the past have been based largely on trading volume.  You will be stunned that many ETFs which trade millions of shares daily are not rated.  I suppose the reason is that  old habits die hard.  Newer, less expensive, better, highly-rated alternative ETFs exist, and investors should become better informed as to these superior alternatives.  

For a whole host of reasons, the highest volume ETFs are not always the cheapest, nor do they offer the best past performance, lowest trading spreads or tax efficiency.  By adding the Ranked & Rated (R&R) ETFs, investors will be more likely to align their needs with the very best ETFs.  Information is power and the R&R ETFs are a better place to begin  your investigation.  

217  Gold
Yes, this sector has travelled inversely to the U.S. dollar recently.  This ChartList already contained eleven unique charts, but we decided to add Sprott Physical Gold Trust (PHYS).  What makes this a unique equity is that it allows investors to trade in shares for physical gold deliveries — something GLD does not.  PHYS has actually outperformed GLD, perhaps fueled by the fear that should the fiat currency collapse, GLD shares would be meaningless. 

The other reason we have included PHYS is that tax treatments in this arena are problematic.  With PHYS, tax benefits flow through to the owner of PHYS; this is not so with GLD.  GLD is considered by the IRS as a Collectible, and it is taxed at 28%.  Therefore, closing out a profitable trade only yields you 72% of the profits.

With PHYS, you pay taxes on your profits but at the preferential capital gains rate because PHYS (and CEF) are structured as passive foreign investment companies.

300  Market Breadth
We like the Bullish Percent Index charts for the NYSE and therefore decided to add a Bullish Percent Index for the NASDAQ as well.  In addition we’ve added the histogram below the chart showing the percentage of NASDAQ stocks above their 200-day moving average.  You’ll recall that Bullish Percent Index is a breadth indicator based on the number of stocks producing a buy signal on a Point & Figure chart.

400  Bullish vs. Defensive Market Mood
Historically, when the market is feeling bullish, the two key sectors reflecting that sentiment have been Consumer Discretionary (Cyclicals) Sector (XLY) and the Technology Sector (XLK).   The flip side of the coin is when the market is moving to a more defensive posture, and Consumer Staples (XLP) and Utilities (XLU) then show strength.

As most of you know, we love the PerfChart tool.  It is a visually powerful storyteller that helps investors identify and sort out relative strength relationships between ticker symbols over differing durations.  This new chart, which we’re calling a “stacked strength” chart, offers an alternative that adds a number of analysis insights.  It literally (a) stacks the market atop both the bullish and defensive sectors; (b) shows high, low and close; and (c) adds a 50 moving average line to each.  Check it out.  I believe your eye and brain will quickly connect to produce the appropriate “eureka” moment. 

420-12 through 420-90   Fidelity’s Buys & Sells

  1. This is a  bit of a “back-to-basics” sermon.  This quarter, we disciplined ourselves to investigate each and every new Fidelity equity purchase that was unfamiliar to us.  We made a concerted effort to look up each new name, read up on what business sector and industry the equity operates in, and familiarize ourselves with the company.  It was an illuminating process that we believe will pay dividends down the road since it switched on our radar to watch for all kinds of new opportunities.  

    We highly recommend this simple exercise, and we’ve made it very easy for you.  Simply open the Fidelity Sector ChartList of your choice and look for those equities with four asterisk “stars” (****)  after their names.  These four stars signify that Fidelity purchased the equity in the fourth quarter of 2016 and moved it into its top ten holdings.

  2.  

    A reminder that the managers of these Fidelity Select Sector Funds often go abroad in search of international opportunities.  With the dollar being so strong presently, this strategy makes perfect sense.  Our point is that these are not just domestic mutual funds.  Many have twenty percent in international, non-USA corporations.  Having said that, we remind you that many USA holdings are large corporations with less than 50% of their revenues sourced from the US.  They are like international mutual funds.
  3.  

    We would also continue to encourage ChartPack users to think of these quarterly updates as an opportunity to learn from Wall Street insiders.  By reviewing the charts of equities under accumulation (being purchased) and distribution (being sold) by Fidelity, you are receiving a virtual PhD training course in trading and execution.  We can guarantee that the insights will make you a much better investor. 
  4.  

    Last quarter, we wrote about one big theme that Fidelity was executing which involved the accumulation of exchange based companies (this quarter, they bought CBOE) and the selling of financial companies such as Legg Mason this quarter).  This period, we see Fidelity moving towards retailers who have unique defensive business models against Amazon.  

    For example, the TJX Company (TJX) operates off-price apparel and home fashion outlets in both domestic and international markets.  Fidelity also likes Ross Stores (ROST), Dollar Tree (DLTR) and Home Depot (HD).  These are all retailers who for a host of reasons can defend their respective turfs against the Amazon bulldozer.  What is Fidelity NOT buying?  The likes of Macy’s (M), JC Penny (JCP) and Kohl’s (KSS).

    Our point is that you should consider the themes that Fidelity is executing with its buys and sells.  It’s much more than just a single stand-alone ticker.

  5. A reminder that when you see a large number of buys or sells, the probability is high that the fund has a new manager who will sell the previous manager’s holdings, will buy new positions and will generate relatively high turnover with nasty tax implications for fund holders.  Both Fidelity Chemicals and Fidelity Construction & Housing have new managers.  It’s certainly something to keep an eye out for with each and every mutual fund you are considering.


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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