Comparing a Stock to the S&P - Different Types of Charts

[JLJ 10]

When I compare a stock to the S&P I get a very different picture when I change the chart to "Dual Axis Charting Mode." I've attached stock charts for MFB, both covering the same time period - the yellow lines show MFB and purple line shows the S&P. In the plain vanilla chart, it appears that MFB consistently out-performed the S&P.

 

But on the chart below, with Dual Axis Charting Mode turned on (see numbers on left), it now it looks like MFB underperformed the S&P until about August 17 when the lines crossed.

 

How can this be? I understand that sometimes a chart must be compressed to fit the highs and lows of the lines, but that's not the case here.

 

BTW, I tried to delete my first attempt at this message where my charts didn't post the way I wanted them to, but I can't delete my first post. Sorry for the duplication.

Edited August 27, 2010 by JLJ

[ekshay 10]

JLJ, that second chart is an abuse of the Dual Axis Charting Mode.

 

Explanation:

When you are looking for "Which market out-performed the other over a certain period of time?"...

you are actually asking "If I had gone LONG on both of these markets on the same day (like July 28th), with the same amount of money/risk/leverage, then which one would have made me more profit?"

 

While if you went SHORT, its S&P that out-performed MFB.

 

So, your "plain vanilla chart" is actually the valid comparison.

 

The Dual Axis Charting Mode is great for saving screen space, eg. when plotting 2 completely different indicators like Volume & RSI.

Someone else might help us with a useful application of Dual Axis with prices. I cant think of any right away.

[JLJ 10]

thanks! I appreciate your answer.