Forum Archive Index - June 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

> 
> 
> the thing that really amazes me is that the tops of the graph always
> seem to be sitting on the trend line, 
>
>

I don't think this is so amazing.   

The logarithmic scale of the graph will tend to suppress the 
apparent size of the higher peaks.  It will tend to linearize changes 
in price that are not linear.

Furthermore, consider the hypothetical case where there is a big 
jump, one way or the other, in share price.  If the share price 
suddenly jumps in value then the old trend is over, and that new data 
point will no longer be on the old trend line.   A new trend has been 
started.

Given this, it would be amazing if the top of the graph *wasn't* on 
the trend line, if the trend line is appropriately positioned (see 
explanation below).

>
>
> and even more amazing that that huge drop at the very end happened
> just before it nearly crossed the trend line ..   
>
>

You are referring to Phaedrus's post on Telstra dated 22nd June?

If so what about the 'even huger' drop shown at the end of July 2000?
That was nowhere near the trend line!

Actually I think Phaedrus could have drawn the trend line in several 
places on that graph.   He chose to draw it going through the peaks, 
but the same line could have been drawn at any height on that graph.

And if he had chosen to put the line at a different height then the 
most recent drop would have occurred nowhere near the trend line.

The trend defines the slope of the line.   Not, where it is 
positioned on the vertical axis.   And the trend is calculated using 
the graphed data, so the fact that there is a correlation should 
come as no surprise.
 
> 
>
>it's like magic :).
>
>

Perhaps it's time for some revision as to what a 'trend' is and what 
a 'logarithm' is for you Jerrold?  

It is very easy to be seduced by a fancy graph from a flashy charting 
software package.  I am sure that I could do an even better 
presentation of share statistics that were completely useless to you. 
 Not that I am suggesting that Phaedrus's graph was meaningless.  Au 
contraire, it was actaully quite interesting and could be useful, if 
used in a measured way.   But be careful about trying to read more 
into information than is there.

So I'd say it's more 'like mathematics'.   I can't see 
any magic here.  Take care. SNOOPY



 
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