**1) Why charting must be done using a vertical log scale ****

I went though this in detail here:

**Why Arithmetic Stock Charts Are Worthless**. If you haven't read it, read it. Seriously.

Stock price movement is logarithmic / exponential. Sorry, this needs to be emphasized.

**ALL GAINS AND LOSSES IN THE STOCK MARKET ARE EXPONENTIAL!! NOT ARITHMETIC!!**. To see why, consider this example:

Is a 200 point move equivalent to any other 200 point move?

**NO**. If 200 point move A occurs when an index is at 4000 (5%), it is much less meaningful than if a 200 point move B occurs when an index is at 500 (40%).

This is why linear scale stock charts are almost meaningless.

Because we don’t measure stock performance on an absolute basis, we measure it on a RELATIVE basis. A 50% gain is a 50% gain. Whether you bought a stock at 10 and it moved to 15 or you bought the stock at 1000 and it moved to 1500. This makes all gains and all moves in the stock market exponential / logarithmic.

**Stock data on a linear chart improperly exaggerates the importance of moves at the top of the chart and improperly diminishes the importance of moves at the bottom of the chart!.**

The other reason why this is important is in measuring wave speeds. Historical comparisons cannot done on a "points per day" basis, for the same reasons listed above. After a large wave advancement, a 10 point per day move with an index at 4000 is much less impressive than a 10 point per day move with an index at 500.

Since all growth in the stock market is exponential, you want to figure out exponential growth rates. A straight line on a log scale means "a line of constant exponential growth". This is a much more meaningful way to compare wave sizes when it has moved over a large distance (such as a move in the SPX from 700 to 1300).

**

**NOTE**-

*There is an exception to this general statement that arithmetic charts are worthless. It is the crux of Gann's analysis, and arithmetic charts are critical to this analysis. Because there is a *very* specific way you must set up your templates to make them work. And when you do, very specific angle relationships show up that otherwise won't.*

But in general an arithmetic chart with no special format will not give you proper relationships on a trendline analysis.

But in general an arithmetic chart with no special format will not give you proper relationships on a trendline analysis.

**2) The move off the bottom is not an impulse, and continues to not be an impulse**

Please see these references:

1)

**Not All Five-Wave Moves Are Impulses: A Short Treatise on Elliott Wave**

2)

**Another Impulse Wave Study: A Look at the 1974-1975 Low and Rally**

3)

**Historical Count: 2002-2007**

4)

**Five-Wave Structures Revisited: The Identification of an Impulse Wave**

There are no absolutes in the stock market. There are exceptions to almost every rule. And you have to deal in probabilities. So I can't say definitively (just like no one can) that the move is not an impulse. But based on how many tendency violations (and indeed at least one 'rule' violation) there are in the wave from the 2009 bottom, you would need to assign a

**very low probability**to the impulse count. Maybe the low single digits.

In no way should it be a primary count, and anyone who says that it is an impulse above all other possibilities, is doing a huge disservice to everybody.

Are we in a bull market right now?

**YES! Absolutely!**

Are all bull markets impulses?

**NO! ABSOLUTELY NOT!**

This is the source of the problem. Many want to see this as the beginning of a

**secular bull market**, even though the internal wave structure does not even come close to conforming to one.

This is a very powerful cyclical bull market. And I think it will likely continue for years. But it can absolutely be a

**corrective wave structure**and still be a

**cyclical bull market**. Want proof? Just look at 2002-2007. We have a prime example in just the last decade (including numerous ones over the past 100 hundred years).