STOCK GOODIES PLAYS OF THE WEEK

[BoomPickens]

Key points on the benefits of arithmetic and semi-log scales:

Arithmetic scales are useful when the price range is confined within a relatively tight range.
Arithmetic scales are useful for short-term charts and trading. Price movements (particularly for stocks) are shown in absolute dollar terms and reflect movements dollar for dollar.

Semi-log scales are useful when the price has moved significantly, be it over a short or extended time frame
Trend lines tend to match lows better on semi-log scales.
Semi-log scales are useful for long-term charts to gauge the percentage movements over a long period of time. Large movements are put into perspective.

Stocks and many other securities are judged in relative terms through the use of ratios such as PE, Price/Revenues and Price/Book. With this in mind, it also makes sense to analyze price movements in percentage terms.