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 32.02% per annum.
- MCD price at the close of April 26, 2024 was $273.09 and was inside the primary price channel.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 89.32% per annum.
- MCD price at the close of April 26, 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 MCD 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: January 18, 2024
End date: April 26, 2024
a = 7.5292
b = -0.0011
s = 0.0186
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0011) – 1
= -32.02%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0186) – 1
= 7.72%
January 18, 2024 calculations
Top border of price channel:
Exp(Y1,189)
= Exp(a + b × X1,189 + 2 × s)
= Exp(a + b × 1,725 + 2 × s)
= Exp(7.5292 + -0.0011 × 1,725 + 2 × 0.0186)
= Exp(5.7423)
= $311.77
Bottom border of price channel:
Exp(Y1,189)
= Exp(a + b × X1,189 – 2 × s)
= Exp(a + b × 1,725 – 2 × s)
= Exp(7.5292 + -0.0011 × 1,725 – 2 × 0.0186)
= Exp(5.6679)
= $289.42
April 26, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,824 + 2 × s)
= Exp(7.5292 + -0.0011 × 1,824 + 2 × 0.0186)
= Exp(5.6376)
= $280.78
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,824 – 2 × s)
= Exp(7.5292 + -0.0011 × 1,824 – 2 × 0.0186)
= Exp(5.5632)
= $260.65
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 32.02% per annum.
- MCD price at the close of April 26, 2024 was $273.09 and was inside the primary price channel.
Secondary Trend
Start date: April 5, 2024
End date: April 26, 2024
a = 2.4282
b = 0.0017
s = 0.0087
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0017) – 1
= 89.32%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0087) – 1
= 3.54%
April 5, 2024 calculations
Top border of price channel:
Exp(Y1,243)
= Exp(a + b × X1,243 + 2 × s)
= Exp(a + b × 1,803 + 2 × s)
= Exp(2.4282 + 0.0017 × 1,803 + 2 × 0.0087)
= Exp(5.5985)
= $270.03
Bottom border of price channel:
Exp(Y1,243)
= Exp(a + b × X1,243 – 2 × s)
= Exp(a + b × 1,803 – 2 × s)
= Exp(2.4282 + 0.0017 × 1,803 – 2 × 0.0087)
= Exp(5.5638)
= $260.81
April 26, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,824 + 2 × s)
= Exp(2.4282 + 0.0017 × 1,824 + 2 × 0.0087)
= Exp(5.6353)
= $280.13
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,824 – 2 × s)
= Exp(2.4282 + 0.0017 × 1,824 – 2 × 0.0087)
= Exp(5.6005)
= $270.57
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 89.32% per annum.
- MCD price at the close of April 26, 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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