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Relative Strength Comparison

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While waiting for the Fed, I was playing around with QCharts and discovered that you can do a relative strength comparison. If you enter the symbol, followed by a space, and then a "/" followed by the symbol you want to compare it to, you get a relative strength chart. For example, HAL /SPX.X, would show you how Halliburton (NYSE:HAL) is performing in relation to the S&P 500. Since HAL is one of the stocks Premier Markets is watching, lets see how it's doing.

Halliburton versus S&P 500 Relative Strength Chart

On a relative strength basis, Halliburton has been out performing the S&P 500 since late April, but there appears to be some overhead resistance. Lets see how it works with technology stocks.

JDSU and MSFT versus Nasdaq Composite Relative Strength Chart

Based on the above chart, which stock would you like to have owned since January? The bar chart would have told you the same thing, but sometimes a relative strength comparison can help you make a decision if you're torn between two stocks. I believe it's William O'Neil that emphasizes picking stocks that are outperforming the S&P 500, and publishes some version of relative strength in Investors Business Daily if your software doesn't have this capability. This tool is geared more towards a long- term trader, but short-term traders can use it to identify stocks or indices that are under/outperforming the overall market.

Networking and Semiconductors versus the Nasdaq Composite

These are just a few of the fun things you can do with relative strength, while you're sitting around and waiting on the Fed.

Jeff Canavan
Assistant Analyst

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