The Traders Journal

Your Dashboard to Navigating the Markets - ChartPack Update #20 (Q2, 2018)


There’s a legendary tale in automobile circles how in the 1990s the executives at General  Motors got their design engineers to focus on what was most important.  They wanted to erase all their preconceived notions and assumptions about building cars.  They blindfolded all the engineers and lead them into a room where they’d stashed a borrowed a Lamborghini Countach.  The objective was for the blindfolded engineers to fondle the body lines of the Lamborghini with their bare hands and gain some fresh inspiration.

Although less dramatic, there are similarities to what the Tensile Trading ChartPack Dashboard offers investors.  It presents investors with a carefully distilled and organized view of the markets.  By presenting “just the essential facts”, the dashboard allows investors to jettison their own preconceived notions about the markets and to actually see the markets exactly as they are instead of how an investor might wish them to be.  

You wouldn’t try to drive your car without a dashboard.  Likewise, don’t attempt to invest in the stock market without the Tensile Trading Dashboard.

Now, let's take a closer look at this quarter's enhancements and share a few of our key observations that we want you to know about.

#10.4 - Bullish and Bearish Dashboard

We changed the name for this ChartList from ‘Permission to Sell’ to the ‘Bullish and Bearish Dashboard’ title you see in the heading above.  The 15 Longterm Indicators present a complete picture of the present market and reflect whether the balance of these historically significant indicators suggests a bullish or bearish orientation within today’s market.   

Stock markets are either bullish or bearish based on these essential indicators. At market tops, they reflect an accumulation of bearish signals. At market bottoms, they reflect an accumulation of bullish signals. Please review these carefully selected 15 indicators and their historical behavior at market turns, and you, too, will become more confident in holding a more bullish or bearish portfolio throughout the markets’ normal rallies and reactions.  Don’t forget to refer to notes below the charts that accompany each of the indicators in “view all” mode. 

#217 - Gold

This ChartList has been updated with more descriptive charts and the addition of two benchmarks to many of the graphs. Something we suggest to all ChartPack users is to experiment with using the Legends button and plotting in the “verbose” mode.  It is so much more descriptive, and one doesn’t need to memorize thousands of ticker symbols. As always, don’t forget to refer to the informative ChartPack notes below many of the charts when in “view all” mode. 

Lastly, we have created a new PerfChart containing the top four mutual funds and adding both ETFs — Vanguard Total Market (VTI) and SPDR Gold Shares (GLD).  Monitoring these key relationships is prudent.

#400 - Sector SPDRs

Both Grayson and I are huge fans of sector analysis because if you get this correct, the chances are much better that you’ll make money — even if you slip in other areas. 

With its 22 charts, this ChartList yields clear conclusions as to the present market’s sector preferences. With clarity as our mantra, we’ve made a number of changes. All charts have been resized and are now plotted in “Verbose” under the Legends pulldown menu. Expanding ticker symbols into full descriptions reinforces precisely what you are looking at. The two previous PerfCharts have been purged because they created  more confusion than clarity.  Finally, we replotted all the sector charts using candlesticks because candle volume created a distortion in the charts which we felt did not contribute positively to our analysis efforts. 

The bottom line is that all investors should spend some time each week getting intimate with these essential sector charts. 

#640 - Dividend Darlings

A number of users made the excellent suggestion that we “house” equities, ETFs and mutual funds in this ChartList.  Now the ChartList contains the 30 most popular equities — which we call “institutional dividend darlings” — as well as the four top-rated dividend-oriented ETFs in addition to the four top-rated mutual funds.  Note that the actual dividend payout is charted below each ETF and mutual fund, thereby showing the exact payout as well as the historical dates of these payouts.

NOTE:  This chart layout should be in every investor's arsenal for the simple reason that you don’t want to time your purchase just prior to a distribution. The result is that a portion of your money is returned to you as a taxable distribution.  In most instances, you should wait until after the distribution to buy in.

420-12 to 420-90 - Fidelity Sector Portfolios

I was shocked this quarter. Truly. I had to go back and double check everything because I thought to myself, "There's no possible way that's true". Gatis and I have been updating this ChartPack for years, diligently tracking the changes from quarter to quarter in all 40 of the Fidelity Select Portfolio funds.

In all that time, we've never seen a quarter with as few unchanged funds as Q2 of 2018. Never.

Now, that tells me one very important thing: the markets are volatile and you need to pay attention. The big money, the guys with the major research teams and the smart managers, they're not sitting on the sidelines here and simply watching the market. They're making important moves to position themselves properly for what is clearly a changing climate. This is not the time to be lazy or passive or just hope that your portfolio will be alright. This is the time to pay close attention to where your money is invested and do all you can to put yourself on the right side of the market.

The good news for us as individuals is that we can take a look at where the big money Fidelity guys are putting their capital to work. There were some fascinating highlights from this quarter's update, so let's dive in here with a few key observations:

  • Two stocks appeared as large new additions not just across one fund, but across multiple – small-cap Biotech stock Sarepta (SRPT) and large-cap Materials company Air Products and Chemicals (APD). Sarepta has been trending nicely and recently saw a large gap up to add to that strength. APD has been trading sideways in 2018 but is testing an important support level that may provide a good entry point if it holds. For both stocks, the strong multi-fund institutional support is an important sign.
  • The Cyclicals sector has been maintained strong leadership, even throughout this year's rocky market conditions. In that space, the Consumer Discretionary Portfolio built a large new position in a major apparel brand. That has coincided with a beautiful reversal for the stock and a large earnings beat that's helped add fuel to the uptrend. Be sure to take a look at ChartList 420-30.
  • The Environment / Alternative Energy Portfolio (list 420-42) was unusually active this past quarter, with 4 new holdings in its top 10 list (including Air Products and Chemicals (APD), mentioned above). Of particular note were two of the stocks that fell out of that fund's top 10. Look for the two stocks in that list with the (XX) notation at the end of their names.
  • I have to admit, this one made me do a double take. I was shocked to see that the Industrials portfolio added a HUGE – like, really huge – position in General Electric (GE). This is a stock that, as we all know, has struggled greatly in recent months. It's been a consistent story across the financial press and has even been dropped from the DOW. To see this big buy from the Industrials portfolio was surprising, but it does show that the smart money doesn't think the game is over just yet. Very intriguing here, that's for sure.
  • Evergy (EVRG) was added across multiple funds. The Utilities Portfolio took a very large position in the stock, making it one of the fund's largest holdings. It could be worth watching as the stock tries to continue its recent climb and break out above the high 50s. 

Lastly, I want to make one important suggestion.  We focus each quarter on what has changed in the portfolio compositions of these Fidelity funds.  However, what is of equal importance is actually what has NOT changed.  The positions that these funds hold in large weights over a longer period of time – across many quarters or even many years – are often fantastic investment candidates.  Particularly when you find a stock that is owned by multiple Fidelity funds, it can be a sign that this company has earned the interest and respect of the big guys, which provides tremendous support for the stock.  Browse through the ChartLists between 420-12 and 420-90 and take note of the stocks that appear multiple times with no asterisks by their names.  You may just find some strikingly strong charts to keep an eye on. 


Already have the ChartPack? Here's how to upgrade:

  1. Log in to your account, then visit the "Manage ChartPacks" page (accessible from the bottom of the Members Dashboard or from the "Your Account" page).
  2. In the table that appears, find the entry for the "Tensile Trading ChartPack" (if you don't see the Tensile Trading ChartPack listed, that means that you haven't purchased it. Click Here to do so now).
  3. Click the "Re-Install" button next to the Tensile Trading ChartPack to start the update process

The download should take about 15 seconds, after which you can explore the new ChartLists and other updates!

New to the ChartPack? Here's how to install it:

If you'd like to add the Tensile Trading ChartPack to your StockCharts account, Click Here.


Trade well; trade with discipline!

Gatis Roze, MBA, CMT
Grayson Roze, Business Manager,
Co-Authors, Tensile Trading (Wiley, 2016)
Co-Presenters, How To Master Your Asset Allocation Profile

Gatis Roze
About the author: , MBA, CMT, is a veteran full-time stock market investor who has traded his own account since 1989 unburdened by the distraction of clients. He holds an MBA from the Stanford Graduate School of Business, is a past president of the Technical Securities Analysts Association (TSAA), and is a Chartered Market Technician (CMT). After several successful entrepreneurial business ventures, Gatis retired in his early 40s to focus on investing in the financial markets. With consistent success as a stock market trader, he began teaching investments at the post-college level in 2000 and continues to do so today. Learn More
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