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Introducing The First 2 AllStarCharts Indexes

September 9, 2016

Sometimes Standard & Poors, Dow Jones, MSCI and FTSE simply don't do the trick. If we want to analyze a specific group of stocks and the big boys haven't created an index with what we want, what then? Through technology, we can just build our own. There's nothing stopping us. Now, we're not just going to create random indexes so we can complete with them in their space. The point here is to build something if and when it is necessary. Will it help us throughout our process or just create unnecessary noise? That is the big question.

One of my more recent first world problems is the fact that I don't have a reliable index for Oil Refiners. The Valeros and Tesoros of the world just don't move with the other indexes that I analyze in the energy space. They're different. So while we have $XLE representing the monsters like Chevron and Exxon, we also have $OIH to view just the services companies and $XOP for the producers and explorers. But the refiners don't have anything solid that goes back long enough to analyze. So the hell with it, we'll build our own.

I'd like to introduce you to the All Star Charts Cap-Weighted U.S. Oil Refiners Index. Due to the differences in market cap between the companies, I decided to make it a cap-weighted index like the S&P500. Also, I kept the index to just U.S. refiners. Here is the breakdown:

Phillips 66 $PSX 21.92%
Marathon Petroleum $MPC 21.61%
Valero $VLO 20.29%
Tesoro $TSO 14.88%
Hollyfrontier $HFC 10.79%
Western Refining $WNR 5.95%
PBF Energy $PBF 4.55%

From the looks of it, we are breaking out above a downtrend from the late 2015 highs after putting in a failed breakdown and bullish momentum divergence. Although I do think we can rally from here, that downward sloping 200 day moving average annoys me. So it's hard to get aggressive towards the whole space here for anything more than just a short-term trade, at least for now:

Click Charts To Zoom In

ASC U.S. Oil Refiners

The good news is that now we have an index that we can always refer to and compare to other areas within the energy space. It's been difficult to do until now (Members can view charts & analysis here: ASC CRACK). Also, note that there is a new ETF that allows you to gain exposure to the refiners around the world, ticker: $CRAK. It's very illiquid and brand new, but something that will likely become useful next year sometime.

The second index we created is for our global analysis. Although we have things like the Global Dow Index and FTSE or MSCI International stuff, I'm not satisfied with the data and/or component weightings/holdings. So I built the All Star Charts Equal-Weighted Top 10 Global Exchange Index as the solution to my problem. This is simply the 10 biggest exchanges in the world combined into one equal-weighted index. Each of the 10 components represents 10% of the Index:

NYSE Composite $NYA 10%
Nasdaq Composite $COMPX 10%
Japanese Nikkei 225 $NI 10%
London FTSE 100 $FTSE 10%
China Shanghai Composite $SSEC 10%
Hang Seng $HSI 10%
German DAX $DAXX 10%
Toronto Exchange Index $TSX 10%
Brazilian Bovespa $BVSP 10%
S&P/ASX200 $XJO 10%

It's interesting how this index peaked in October of 2007 and then last year rallied back into that resistance and failed. In my opinion, this is a very valuable index and really tells the global story. We are quickly approaching this level of resistance near 166,000 once again. The more times that a level is tested, the higher the likelihood that it breaks. I think a breakout here is inevitable and looks bullish to me:

ASC GLOBE

We can't trade this index, but from an analytical perspective, particularly my top/down global approach, it will be very useful to use moving forward. I think this tells the global stock market story better than most of the indexes that are already out there. I will add this to my arsenal and include this new index as part of my weekly homework. (Members can view charts & analysis here: ASC GLOBE)

So these are the 2 indexes that will be proprietary for All Star Charts Premium Members starting this month. I will be updating these charts on both short-term and long-term time horizons with annotations and commentary every week.

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Tags: $CRACK $GLOBE

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