5 replies to this topic

[mss]

Visual analysis must be made with FULL awareness of the scale used on a chart. I am NOT saying one scale is better than the other. Just KNOW the scale used when looking at a chart and reading a posters comments/analysis.

Below are two identical charts, except one is Linear and the other is Log. To make my point as clear as possible I drew parallel lines to form a channel around the movement of price on a "closing" basis.
The parallel channel was started with the bottom trend line first, then I let Stockcharts draw the top line.

Scale in this case makes a big difference in the visual analysis.




Comments always welcome.
mss

[hiker]

generous of you to show this comparision...thank you.

[selecto]

mss, I reached for my Edwards & Magee when I read your post below. To make their way-too-long story short, long term wants a log scale whereas intermediate/short term, the slighter distortions don't matter a lot. I believe that the rule of thumb is that any chart showing a price change of more than 10% wants to be log. I also recall that Gann wanted log up and arithmetic down, on the theory that one got quicker warnings that way.

[n83]

Xd&d already showed the linear vs log in one of the next posts in that thread. However, is this also a difference of closing value vs candlestick ie intraday/week high and lows? It looks like a closing value chart..yours that is.

[Iblayz]

I saw an inverted chart somewhere over the weekend. I think it was a weekly chart and looked like a table pounding bullish setup....except that it was inverted. So on another site I decided to get cute and try to invert weekly charts on various indices, post them with bullish comments and see if anybody figured it out. I never made it. I was stricken with what I saw. The NDX, Nasdaq, DOW, OEX, NYA, SPX and RUT all had major weekly breakdowns last week. You don't even have to draw any lines to see the breakdowns. What got my attention and stopped me in my tracks was this. The NDX had a major weekly breakdown on the largest volume stick in over four years. The Nasdaq had a major weekly breakdown on the largest volume stick in over six years. The SPX had a major weekly breakdown on the largest volume stick in over six years. The DOW had a major weekly breakdown on the largest volume stick in over six years. The OEX had a major weekly breakdown on the largest volume stick in over six years. The NYA had a major weekly breakdown on the largest volume stick in over four years. What else needs to be said?

[Caduceus]

Thanks for the clarification. I posted at the same time as XD in the thread below. The intent wasn't to belabor the point. Regards, C