[0:14] Welcome to power charting I am your host, Bruce Frazier and very exciting

times in the market.

[0:20] The FED may interest rate decision announcements.
[0:25] Yesterday Market is responding bull asleep from that.
[0:28] We'll talk a little bit about that and then we will get right into finding
leadership, we're going to use semiconductor Industry Group, as our case study
analysis, and we really liked some of the things that are happening in that.
[0:44] Group and many others at this time.
[0:46] So the but to start, let's go to Read that right for bed, it'll help you go
to sleep.
[0:56] And then here a great question from one of our community about analogs and
was very intrigued with the fact that this 2002 three analog using the DOW
Industrials was compared to the S&P 500.
[1:12] It was curious to know if you can compare different instruments to each
other such as two different indexes.
[1:19] Absolutely, we are in charting King at the unfolding behavior of mass
psychology among investors in chart patterns.
[1:30] So anytime you're looking at a chart pattern you're effectively looking at
an analog so head and shoulders top you're looking at some idealized example of a
head and shoulders top and comparing it to an instrument that you're currently
studying so that is a form of an analog and here in this case, we work Comparing
the accumulation structure of 2002 3 in the Dow Jones to the way that the S&P 500
has been setting up in 22 and 23.
[2:05] And we numbered these, you can see here.
[2:10] There are deviations or variances in the way.
[2:13] This is unfolding, but you can see climactic low at one rally in a up.
[2:20] Thrusting action into two.
[2:22] Four is a lower high point.
[2:24] Three actually is a secondary test with a slight undercutting of the climax
at one, which proves to be good support.
[2:32] And so now .5, and then we made the case that point six would be important
next leg or next event up.
[2:42] Now, look at the distinctions because part of looking at Analog studies is
to look for what is a like but what are the deviations and so know.
[2:53] Note, the rally from five to six back in 2020.
[2:57] 2003 was a diminishing thrust.
[3:03] Slowing Advanced weakening.
[3:06] As it was going up, making a lower high and this proved to be a final high.
[3:11] But in fact, the different situation occurred, there was a sharp break
initially in 2002 in December, then a low into the end of Year.
[3:23] And then around good rally phase to start the rally, as was the case at from
five to six prior, but then continuation with just an ability to be able to just
keep pushing up, much better rally in the second.
[3:40] Half up to six, and it took out point for so inherently a stronger rally
occurred.
[3:47] This is a distinction, A variation between then, and now, that's what we do.
[3:52] With analogues is something that Wyckoff is really, really good at and he
didn't have relative strength analysis.
[3:59] So he was always looking at waves ways that waves of advanced a waves of
decline, comparing and contrasting looking for relative strength characteristics in
those times many years ago, and so something different is occurring now and we will
talk a little bit more about that, the FED met.
[4:19] So, anyway, good question on analogs.
[4:22] Said discussing and then here CPI I pointed out kind of mid-year second half
of the year.
[4:32] I pointed out that inflation was slowing CPI index started to really flatten
out in the second half of the Year.
[4:41] Well, we were looking at and we just study price.
[4:44] We I'm not a fed Watcher.
[4:46] I don't try to figure out what's in their head.
[4:48] I'm just looking at what prices are doing.
[4:50] You see the US Treasury Treasury to year topping out at 4.7, it starts to go
down.
[4:58] Well, at the same time or in a similar period, you can see that the CPI was
flattening out.
[5:04] So the two-year really is making a vote about what it sees happening with
inflation and interest rates started to fall, we took a point, figure count of that
structure.
[5:16] Got to count that went down to like 410 2390.
[5:20] Showed you those charts in the past.
[5:22] And so, Now we're just hovering right around for.
[5:25] So the two year was really voting and saying that there was a Slowdown in
inflation coming, maybe a Slowdown in the economy and it was causing interest rates
to fall.
[5:40] So note in November and December on this data that were actually getting
down tips in the CPI index.
[5:49] Whether that can happen in the Futures, anybody He's guess but the trend is
now slightly falling and if this can continue the FED which made more Khalid
dovish, I guess but they raised a quarter yesterday but also they seem to indicate
that the trajectory of rate Rises would continue but at a lesser rate, slightly
lesser pace and they're really watching this data in my view.
[6:23] And so I think this is what the bond markets been reacting to why the bond
market has been rallying nicely in the last number of months.
[6:32] And also, I think it's why the FED is going to soften their position and
their interest rate.
[6:40] And this is, I think, what's helping the stock market to have a more
important rally as we go forward.
[6:47] Okay?
[6:48] So enough on that, I had next week, I'll show you some point figure.
[6:54] Charts, probably the most important thing I could show you right now, would
be this chart here, which shows the we were looking at this.
[7:05] A lot of things have happened very quickly in January into February, but we
were looking for a break in the NASDAQ 100 Above This downtrending supply line.
[7:15] It broke that went up to the 200s broken through that only spent a couple
days on the 200.
[7:21] It's working.
[7:23] Overhead Supply.
[7:24] This is what this green shading is about is there's a lot of over said,
overhead Supply in here.
[7:31] And what we really want to see, is a good acceleration of this rally before
a pause, and then a pause, not any kind of a return return back into the structure.
[7:43] This didn't, now starts to look more like accumulation and it doesn't even
look complete yet.
[7:51] But this is very Constructive and we're accelerating which means there could
be an element of climactic Behavior.
[7:59] Now, as we go into point and figure count areas and we'll look more at those
next week.
[8:06] But anyway, you can see here that this climactic Behavior could go on for a
period of time.
[8:12] It'd be great to see it.
[8:13] Get above the peak here.
[8:15] Set in August before it has any kind of arrest but we will just have to
watch and see what happens.
[8:23] And also, I just point out here I put this point figure count don't have the
chart to show you, but 1:49, 11 for, and look at how it really picked up the
climactic low.
[8:35] And also tended, to be the place where the lows are more or less holding is
right in this 11 to area, couple of pushes below, but it can't stay below.
[8:45] So classic Behavior.
[8:47] Okay, let's move on to our topic for the day.
[8:51] We've talked about this This form of scanning in the past because it's a
really a technique that I've been using for.
[8:59] Gosh, I don't know decades.
[9:01] And it's the way that I process the market for leadership, how I organize
the market going from sectors, really indexes to sectors industry, groups to stocks
and I'm looking for emerging leadership.
[9:17] I want to show you this very simple tool.
[9:19] We've talked about it before I talked about it at chart Khan.
[9:22] And looked at the industrial sector.
[9:25] Today we're going to look at semiconductors but initially I want to show you
here.
[9:30] The scan that I use.
[9:33] Now you see a lot of stuff here but it's really quite simple.
[9:36] These two lines of line 15 16 and 18 are the scan itself up here.
[9:44] We have the different categories of sectors that I will be scanning on and
the Lashes up, here are comment out that particular sector so that it doesn't scan.
[10:01] So it just makes it a comment.
[10:03] And if I want to activate it and scan on it, all I have to do, put my
cursor in and go in here and backspace this out, make it groups of cyclical and
now, this is an active group, and then I would comment out The industry groups.
[10:25] But now what I did is, I actually did a scan on the industry groups because
I want to show you that this is the first cut that I do really is, look at the
industry groups, which is for all sectors, and look for them.
[10:39] In order of leadership, let's talk a minute about this scan What we are in
line, 15, what we are asking for?
[10:49] Is that the stock in this group is above its 39 week moving average, price
is above the 39 that it's that simple.
[11:01] So all you're doing is you're asking for the weekly close to be above the
weekly close of the 39 week.
[11:09] Moving average period, the next line is asking, Thing that the 39 week
moving average be ticking upward, it's an upward Trend.
[11:19] Now this is important because this is our definition of an uptrend, Rising
price above a rising moving average.
[11:28] 39 weeks is a long term moving average takes a lot to turn a 39 week moving
average up.
[11:34] But once you have that up now you have the conditions for Trend.
[11:38] So we are asking that three that in this particular Airline that current,
the current 39 week moving average, is above three weeks ago, so that would define
their being an uptrend in the 39-week.
[11:57] Now, we also want the same condition for relative strength, but to simplify
things what we do is were actually just going to rank on scooter.
[12:07] And so the next line line 18 is ranked by scooter, scooter is a great tool.
[12:11] It's a great index every Instrument in.
[12:15] Well most, every instrument in the stock charts universe is ranked by
scooter has a scooter rank.
[12:23] So we Rank by scooter, strongest to weakest.
[12:27] And the only stocks that we want to or industry groups Etc that we want to
focus on are the ones that are above a rising 39.
[12:38] Of their price, and above a rising 39 of the relative strength.
[12:43] Now, scooter gives us an approximation for that.
[12:47] So the, the logic here is quite simple and that is that we have to have the
condition of being price, being above a rising 39 as a precondition for anything.
[13:00] So, now if we ranked by scooter were generally only going to see the
scooters that are also showing us that the relative strength is Thing to.
[13:08] So let's have a look and I've run the scan for you so that you can see the
this is the industry groups.
[13:17] And here they are.
[13:18] And you can see that there's about a hundred little over 100 industry
groups only 51 of them.
[13:24] Right now, meet our criteria and this is the lowest currently biotech is
only a 16 on the scooter Rank and which is quite low.
[13:35] And the These other industry groups are in order of their relative momentum
which is a great indicator Auto Parts here has a scooter of 83 and Marine Transport
publishing.
[13:54] So you can see them the very top, the winner right now is renewable, energy
equipment, and that is right at the top.
[14:01] I think n phases the really important stock in that group but there are
others.
[14:06] Also, number two, Steel.
[14:08] Very interesting.
[14:09] So steel is, has a 98.9 scooter Rank and is in a strong upward, momentum
Trent.
[14:19] All right, so let's now turn to, I just picked one out.
[14:24] This has a scooter of 69.
[14:27] This is Home Improvement retailers.
[14:30] So this would be Lowe's Home Depot etcetera and look at our conditions
being met Here we can see over here that the moving average is definitely up
ticking prices above and up ticking moving average 39, and the price has formed
what appears to be an accumulation type structure.
[14:56] The the reaction after getting above the moving average has been quiet dull
and sideways.
[15:04] This is a very constructive, it's not pulling back.
[15:07] Is consolidating which shows that the stocks might be near the completion
of accumulation.
[15:13] And then also, you can see that the relative strength, which tends to be
more volatile is above its Rising 39, and has had a good pull back on relative
strength, starting to turn up again.
[15:27] We look for the conditions of confirmation that price is above a rising 39.
[15:33] You can see this back in 2017, actually, back to 2016, But also, the
relative strength is confirming.
[15:39] This because relative strength is our confirmation of leadership.
[15:44] If relative strength is rising and price is rising.
[15:48] We have the conditions of leadership.
[15:50] This is a stock that is outperforming the market.
[15:54] This is an industry group.
[15:55] That's outperforming the market very important.
[15:59] Now let's turn our attention.
[16:02] Let's keep going here.
[16:03] Let's look at, in this case, here's semiconductors.
[16:07] So here's our scan workbench, note and I'll show you a little trick here.
[16:13] I also have the S&P 500 up here, I like to look at those, here's the
Industry Group list, they're all commented out, they won't be acted on in the scan,
the only group in here and this is an industry group.
[16:25] Everything else is a sector or an index.
[16:27] This is the only Industry Group in here and it's blue, which means that
it's It's not commented out the way that we put this group in here.
[16:37] As we went down to the scan workbench and we went to sectors and industries
and here's all the sectors and caps but we go down to technology.
[16:49] Technology is in here and we go to semiconductors, click on this and then
add it with this button.
[16:57] And now this will be and it will be written in the form.
[17:01] It needs to be in to be scannable.
[17:04] And now we have groups in here, we can just remove this after we're done,
leave all the other sectors in and just run this one.
[17:11] So we don't have to write new scans, we can if we want, but we can just
literally plug this in and run it.
[17:18] And so that's exactly what we've done for today.
[17:21] And so, here is semiconductors, here's our list, and you can see there in
order rank of scooter, which is this column here?
[17:31] All semiconductor industry stocks.
[17:34] There's about 91 92, stocks in this industry group only 51 meet our
criteria.
[17:41] So we're seeing the most important uptrends.
[17:46] Everything else is in some sort of some form of a, not of an uptrend of our
preference.
[17:52] Okay, so now we can see, here are some names.
[17:56] These are the strongest, and let's just go in.
[18:01] And so here is the group.
[18:05] Lets go to the top.
[18:06] Here are the groups in order of scooter, 10 per page and we can just go
through and we can scan right through.
[18:16] Now, look at this eh eh our test systems and note how far away the stock is
from its Rising 39.
[18:26] Notice how long it's been going up.
[18:29] It's been going up since about September.
[18:31] Timber October of, I mean, it's been going up before that, but has been
above the moving average, relative strength is up prices up.
[18:39] This is leadership and Leadership tends to persist.
[18:42] This stock is absolutely reflecting that because it's the strongest stock
in the semiconductor sector.
[18:50] Okay, Industry Group.
[18:53] Here's another one.
[18:54] Again, they're ranked by strength of scooter.
[18:56] And this one excellus Technologies.
[19:02] Yes, formed a re accumulation structure here and pause.
[19:08] Look at this, pause at resistance up here.
[19:11] You can go into a daily chart and really study this.
[19:14] But note that the relative strength has been rising really since the end of
2020.
[19:22] So incre up on relative strength in gear up on price and it's just
persistent persistent.
[19:30] Persisted at a Really good, react accumulation in 2022 and is now marking
up again.
[19:36] This is exactly what we're looking for.
[19:38] Even if you're a traitor, a short-term Trader.
[19:42] You want to trade, you want to focus on stocks that have got persistent
leadership.
[19:47] This scan can get that information for you so that you can see best
candidates or you're campaigning purposes.
[19:57] Now, some of these are in this case, In this case, you can see that the
market cap, 1.14 billion smaller company, A dia and big jump and now it's
consolidating its jump, can it continue?
[20:17] I tend to believe I like the way it's pausing here.
[20:20] After a very important jump, I do not know the reason for that.
[20:24] And so here is allegro and Allegro Microsystems note, the jump up Here.
[20:32] And then the persistency of the momentum as this stock is going higher, one
of the really strong stocks and look this whole area back to going public.
[20:41] Pretty much is a re cumulation preparation for another advance.
[20:46] So again, how you choose to interact with these really strong momentum,
stocks is really a personal decision.
[20:57] I leave that up to you, but what I want to do now I've shown you some of
the really Wrong ones.
[21:02] But let's get down here into the scooter ranks that are a little lower.
[21:09] Here's click kulick and sofa.
[21:12] And you can see the accumulation type structure after declining in 21.
[21:18] Look at this mid-year 21.
[21:20] It starts a top out in a downtrend will just.
[21:23] Now if we look over here, we see that there's up, ticking 39 up, ticking 39
on relative strength above of and both cases acceleration is starting to occur and
it's coming out of an accumulation type.
[21:37] Structure may need a backup or a pause here.
[21:40] Darlin quiet would be best.
[21:42] But this has definitely the look of potential accumulation and here so that
we would call this emerging potential leadership.
[21:53] And so these are stocks that once they get going, they can go for a couple
of years.
[22:00] And so this case, this is co Hugh and here note the accumulation style
structure It has a rally up to resistance, pulls back.
[22:13] Backs up to a rising 39.
[22:16] Relative strength is confirmed up.
[22:18] We would expect that.
[22:19] This is a condition that can continue and that this might be very early in
an ongoing uptrend.
[22:26] So this is what we are trading for.
[22:28] And we just said stops at the appropriate places to protect Capital, Lam
Research, Greek accumulation, cyclic, accumulation type structure.
[22:38] Relative strength is now confirming.
[22:41] We don't want to be in these stocks.
[22:42] When relative strength is down because the institutions are avoiding
relative strength, weakness and they are pursuing relative strength.
[22:55] As you can see, look, here's about the area where you got above the 39.
[23:00] On price.
[23:02] You got above the 39 on relative strength and this condition continued from
early.
[23:10] 19 all the way up to the point at which price turned down above, a rising
39, and relative strength was already down was mid 20, 21.
[23:21] So, this is over two years.
[23:23] So these are the conditions that we seek for leadership.
[23:27] Now, sometimes they don't last as long, this may be aborted, that's why
we're Risk Managers.
[23:33] So we're really careful about this and you might just be trading these
stocks completely up to you.
[23:40] So here, another accumulation structure?
[23:43] This is nxp.
[23:44] I relative strength is now getting in gear been out of gear for more than a
year out of here.
[23:52] So anyway, and you can do this with all industry groups.
[23:56] I'm just showing you semiconductors actually the semiconductor group
itself.
[24:01] The actual index of the semiconductor group is not yet on a confirmed by.
[24:05] But let me give you this logic because we only have a couple minutes left
and that Is, when you see an industry group, that is really close to turning up,
you want to go into the individual components.
[24:17] Look for leadership, look for the big cap, stocks look for the
institutional favorites, but go into that group.
[24:24] Just the way I showed you here and identify the leadership names and look
to see whether or not leadership is already starting to confirm up Trends because
you know that there are certain stocks that are going to Two need to confirm up,
Trends to pull up the index itself for that Industry Group.
[24:46] So there's always going to be leadership, focus on the leadership.
[24:50] And so that's one thing I like to do is I like to look for industry groups
that are on the verge on the cusp of changing from down to up, or up to down,
depending on your, you know, how you like to trade my case, I like to trade the
uptrends but For that, that inflection point in you'll see It'll be weeks ahead of
time.
[25:15] It will start to show up and then from that go in and identify what's
already leading the way up liked by K.
[25:25] Ahar here systems was leading for a long time.
[25:30] Prior to the semiconductors and there's no reason you can't trade.
[25:35] Good leadership.
[25:36] That was a fantastic stock to be trading even though the Group itself was
not yet up but again, personal preference item in the future.
[25:47] I will talk about these rates of change.
[25:49] I've talked a little bit about this previously, but rated change on price
rate of change on relative strength, will do more on this.
[25:57] I hope you found this interesting.
[25:58] Helpful useful, plug that scan in and use it and become familiar with it
and it will serve you well and with that thank you so much for being here.
[26:11] We'll see you next time.
[26:12] Take care.