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Last week some guy came on Nightly Business Report reassuring the public
that the current downturn was "just a minor setback". Refering to a chart
of the Dow he claims that "the crash of '29 was just a blip on the
chart... so you have nothing to worry about if you have a long-term
strategy".
The problem is that the chart was on a linear scale, not logarithmic, and
so naturally dampens the big crashes of the past. If that chart were on a
logarithmic scale it would have told a much different story.
It was a scary enough looking chart anyway since it shows the Dow climbing
a steep cliff and then dropping off the other side.
-- John
On Tue, 3 Apr 2001 chrischeatham@xxxxxxxxx wrote:
> I would vote for ego as the culprit -- same thing that makes people
> pick tops all the way up. One thing I would note -- if one looks at
> log charts instead of linear, the rules holding up much better -- for
> instance only this week did the NASDAQ pass even a 23.6 retracement
> of the move since '74. A 61.8% retrace is all the way down at 315.
> Another thing I have noticed is that commentators like to compare the
> Nasdaq decline to the Dow in the 30s. Apples and oranges I think.
> Had there been a Nasdaq going into the 30s, what are the odds of it
> surviving? Not very good, I would think.
>
> Chris
--
__________________________________________________________
John T. Nelson | John's Trading Journal
trader@xxxxxxxxxxxxxxx | http://trader.computation.org/
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