Re: [CANSLIM] semi-log DGO?

From: Harvey Brion <hbrion@ieee.org>
Subject: Re: [CANSLIM] semi-log DGO?
Date: Fri, 31 May 2002 12:28:13 -0700

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I remember seeing this, Katherine.  WON makes a strong argument for
using log scale and to me these same arguments apply to daily charts.
He seems to be rationalizing linear scale for daily charts as "fine,"
probably because both the online and printed product daily charts are in
linear scale and it would be too costly for them to make a change.  It
would be interesting to see what a poll of their subscribers would say.
- -Harvey

Katherine Malm wrote:

> Hi jans, I'm getting better at this...I vaguely remembered something
> at Investors.com about the arithmetic v. log scale issue, and sure
> enough, here it is: Question:To correctly identify a winning chart
> pattern, should we look at a logarithmic scale or an arithmetic scale
> chart? A pattern may look a lot different depending on which type of
> scale you use.Answer:When using a daily chart, an arithmetic scale
> chart (in which the vertical axis denoting a stock's price shows equal
> spacing between each unit of price) is fine. For example, a flat base
> will appear as a tight formation on either the linear or the log scale
> chart. More importantly, check to see that the percentage price change
> between the high and the low of the base fits the parameters of the
> base it portrays. In a good flat base, the stock should never fall
> more than 10-15 percent below the peak in the base. In a weekly chart,
> a logarithmic chart has a couple of advantages. If a stock falls from,
> say, 200 to 100, the depth of the drop will look the same as one that
> falls from 40 to 20. In both cases, the stock has dropped 50 percent.
> Also on a log chart, you can more clearly see when a stock is rising
> fast or too fast in price. If a stock rises 50 percent or more in just
> a week, it will look more dramatic on a log chart than on an
> arithmetic chart. Such climax runs following previous big gains often
> signal the stock's top. --Katherine
>
>      ----- Original Message -----
>      From: Spencer48@aol.com
>      To: canslim@lists.xmission.com
>      Sent: Friday, May 31, 2002 1:16 PM
>      Subject: Re: [CANSLIM] semi-log DGO?
>       Katherine:
>
>           DGO really does it this way: using arithmetic scales
>      for the Day; and
>      semi-log for the week!?
>
>           It's asking those of us who analyze charts using the
>      Canslim method of
>      using PP. BO's, C&H and Double Bottom formations to
>      logically evaluate
>      different items on the same scale.  For instance, if the
>      price of a stock is
>      high, a flat base will look flat on a semi-log where it
>      wouldn't in an
>      arithmetic.
>
>           Does the DGOnline method make any sense to you?  Tom?
>      Anyone?
>
>      jans
>
>
>      In a message dated 5/31/2002 8:57:20 AM Eastern Daylight
>      Time,
>      kmalm@earthlink.net writes:
>
>      <<  Hi Dave,
>       The numeric interval is based on arithmetic scaling for
>      daily and intraday
>      charts, and logarithmic scaling for weekly charts. >>
>
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