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By Mike Marsh

We have been hearing from many TV analysts lately stating we are just about half way back from the retracement level of the DOW from the March 6,2009 lows to its highs on October 9,2007 levels… Let us say this: this has been clearly overshot to the upside by analysts not remembering or knowing about percentage gains or losses…Let us briefly explain this..Any 2 base points with the same points going up or down those 2 base points–the percentage gain up will always be higher than the percentage gain down..Take a stock at 40 going down to 30..Take the base point 40-the 10 point decline you divide by the base point 40-you get a 25% decline..Right!! 10 points..Now let’s take a 30 point stock that goes up to 40..A 10 point appreciation from the base point of 30..You take 10 divided by the base point 30 =33% increase..Wait a minute..What’s going on here..You have 2 base points-a rise of 10 points and a decline of the same variable 10 points from each base points–but a 33% increase going up and a 25% increase going down for the same 10 points!!! And it doesnt matter what base points you use–always the gains going up will be more than the loss going down for the same points..A $50 stock going down to 20 is derived by this: 30 divided by 50 (the base point) is a 60% decline ..But if a $20 stock goes to 50 is an increase in percentage of 150%-30 divided by the base of 20 is 150%..Again 2 base points with the same appreciation or downward amount of 30 points going either way !!! But the upward appreciation is way more in percentage than the downward percentage loss..Its even more distorted if the point amount between 2 base points is used for retracement means..

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The Dow was 14164.53 on 10/9/07 and its low was 6443 on March 6,2009 …You can take 14164.53 minus 6443=7721.53…Lets’ see the actual halfway point based on points..7721.53 divided by 2 =3860.77..Add this amount to March 6,2009 Dow lows is 6443 is 10303.77 –the current Dow as we write this is 8497.18 on June 17,2009 closing…That’s 1806.59 away..1806.59 is 23.4% of 7721.53 (the difference of the Dow high–14164.53 and the Dow low 6443) ..Yet we hear the Dow is 40% down from October 9,2007 and up about 32 % from March 6,2009 lows..We hear we are about just 9% away from the half way mark..How about we have another 23.4% to go to the halfway point..You can clearly see this is in reality the more correct figure when you take actual points not the distorted percentage that always happens when you go either way up and down a base point..

So these TV analysts need to know this..Not by actual points are we near the midway mark in retracements…Like we stated the halfway mark is 10,303.77–23.4 % still away from that mark going up in actual points….Not just 9%…Not using the upward or downward percentage truism that distorts actual points…Again know the truism that the same points going up and down 2 base points..Or the upward points appreciation will always be more in percentage than the downward percentage loss…This only distorts the retracement of the Dow by quite a bit…We are not permabulls..We just want to point out the misunderstanding of percentage gains or losses between 2 base points…Its just too much of a difference that needs to be pointed out..Midway mark of the retracement is 10,303.77–23.4 % away not 9% away from June 17,2009 closing Dow…Write that on your refrigerator and email the TV programs this if you want..How’s that for fun…

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