If you were watching for a bounce on the 2009 trend-line you would have had two very different conclusions if your chart was set to linear (as ours are) or log. Here’s the linear version that we always use:
$SPY sat on the 200SMA long enough for trend-line to catch up and bounced.
Log version shows complete break (interestingly enough we’re testing the underside of trend-line now). Bears were very excited about this break.
What’s the difference? In a linear chart there is no adjustment for a percent move. A chart moves up 2 points if its a move from $20-$22 or $100-$102. Of course a 2 point move in a $20 stock is worth a lot more percentage wise than a 2 point move on a $100 stock. A log chart adjusts for that by moving same amount on chart based on percentage, not points in price. For us, this is meddling we don’t want in our graphs. We want pure price and time, not adjusting for percentage. However, there is no “right or wrong” in this argument, more a preference. E-signal uses linear as default for example while other charting platforms often use log as default (including stockcharts).
The 2009 trend-line for us is the big kahuna — it was THE focus for us in June as you can see in these four posts
March 2009 Trend-Line Sirens calling,
A visit to the Nasdaq Trend-line,
Buy the first test not the second, and
The only chart that counts (hint, it’s the 2009 trend-line chart
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