Stock Price Trends
Stock price trends estimated using linear regression.
Summary
Key facts
- The primary trend is decreasing.
- The decline rate of the primary trend is 0.58% per annum.
- ADI price at the close of May 7, 2024 was $203.57 and was higher than the top border of the primary price channel by $22.06 (12.15%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 11.68% per annum.
- ADI price at the close of May 7, 2024 was inside the secondary price channel.
- The direction of the secondary trend is opposite to the direction of the primary trend. This indicates a possible reversal in the direction of the primary trend.
Linear Regression Model
Model equation:
Yi = α + β × Xi + εi
Top border of price channel:
Exp(Yi) = Exp(a + b × Xi + 2 × s)
Bottom border of price channel:
Exp(Yi) = Exp(a + b × Xi – 2 × s)
where:
i - observation number
Yi - natural logarithm of ADI price
Xi - time index, 1 day interval
σ - standard deviation of εi
a - estimator of α
b - estimator of β
s - estimator of σ
Exp() - calculates the exponent of e
Primary Trend
Start date: December 30, 2020
End date: January 31, 2023
a = 5.0999
b = 0.0000
s = 0.0652
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0000) – 1
= -0.58%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0652) – 1
= 29.80%
December 30, 2020 calculations
Top border of price channel:
Exp(Y416)
= Exp(a + b × X416 + 2 × s)
= Exp(a + b × 602 + 2 × s)
= Exp(5.0999 + 0.0000 × 602 + 2 × 0.0652)
= Exp(5.2207)
= $185.07
Bottom border of price channel:
Exp(Y416)
= Exp(a + b × X416 – 2 × s)
= Exp(a + b × 602 – 2 × s)
= Exp(5.0999 + 0.0000 × 602 – 2 × 0.0652)
= Exp(4.9599)
= $142.58
January 31, 2023 calculations
Top border of price channel:
Exp(Y940)
= Exp(a + b × X940 + 2 × s)
= Exp(a + b × 1,364 + 2 × s)
= Exp(5.0999 + 0.0000 × 1,364 + 2 × 0.0652)
= Exp(5.2086)
= $182.85
Bottom border of price channel:
Exp(Y940)
= Exp(a + b × X940 – 2 × s)
= Exp(a + b × 1,364 – 2 × s)
= Exp(5.0999 + 0.0000 × 1,364 – 2 × 0.0652)
= Exp(4.9478)
= $140.87
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 0.58% per annum.
- ADI price at the close of May 7, 2024 was $203.57 and was higher than the top border of the primary price channel by $22.06 (12.15%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: January 20, 2022
End date: May 7, 2024
a = 4.7265
b = 0.0003
s = 0.0636
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0003) – 1
= 11.68%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0636) – 1
= 28.97%
January 20, 2022 calculations
Top border of price channel:
Exp(Y682)
= Exp(a + b × X682 + 2 × s)
= Exp(a + b × 988 + 2 × s)
= Exp(4.7265 + 0.0003 × 988 + 2 × 0.0636)
= Exp(5.1527)
= $172.90
Bottom border of price channel:
Exp(Y682)
= Exp(a + b × X682 – 2 × s)
= Exp(a + b × 988 – 2 × s)
= Exp(4.7265 + 0.0003 × 988 – 2 × 0.0636)
= Exp(4.8983)
= $134.06
May 7, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(4.7265 + 0.0003 × 1,826 + 2 × 0.0636)
= Exp(5.4063)
= $222.81
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(4.7265 + 0.0003 × 1,826 – 2 × 0.0636)
= Exp(5.1519)
= $172.76
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 11.68% per annum.
- ADI price at the close of May 7, 2024 was inside the secondary price channel.
- Discover a new approach to trend analysis.
- Check the power of mathematical statistics.
- Price channels have never been so accurately estimated.
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