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 25.86% per annum.
- ABMD price at the close of November 3, 2022 was $373.63 and was higher than the top border of the primary price channel by $89.88 (31.68%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 20.40% per annum.
- ABMD price at the close of November 3, 2022 was higher than the top border of the secondary price channel by $50.98 (15.80%).
- 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 ABMD 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: August 2, 2021
End date: October 31, 2022
a = 7.0030
b = -0.0008
s = 0.0698
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0008) – 1
= -25.86%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0698) – 1
= 32.23%
August 2, 2021 calculations
Top border of price channel:
Exp(Y939)
= Exp(a + b × X939 + 2 × s)
= Exp(a + b × 1,365 + 2 × s)
= Exp(7.0030 + -0.0008 × 1,365 + 2 × 0.0698)
= Exp(6.0236)
= $413.06
Bottom border of price channel:
Exp(Y939)
= Exp(a + b × X939 – 2 × s)
= Exp(a + b × 1,365 – 2 × s)
= Exp(7.0030 + -0.0008 × 1,365 – 2 × 0.0698)
= Exp(5.7442)
= $312.38
October 31, 2022 calculations
Top border of price channel:
Exp(Y1,254)
= Exp(a + b × X1,254 + 2 × s)
= Exp(a + b × 1,820 + 2 × s)
= Exp(7.0030 + -0.0008 × 1,820 + 2 × 0.0698)
= Exp(5.6506)
= $284.45
Bottom border of price channel:
Exp(Y1,254)
= Exp(a + b × X1,254 – 2 × s)
= Exp(a + b × 1,820 – 2 × s)
= Exp(7.0030 + -0.0008 × 1,820 – 2 × 0.0698)
= Exp(5.3712)
= $215.12
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 25.86% per annum.
- ABMD price at the close of November 3, 2022 was $373.63 and was higher than the top border of the primary price channel by $89.88 (31.68%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: May 6, 2022
End date: November 3, 2022
a = 4.6899
b = 0.0005
s = 0.0797
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0005) – 1
= 20.40%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0797) – 1
= 37.53%
May 6, 2022 calculations
Top border of price channel:
Exp(Y1,132)
= Exp(a + b × X1,132 + 2 × s)
= Exp(a + b × 1,642 + 2 × s)
= Exp(4.6899 + 0.0005 × 1,642 + 2 × 0.0797)
= Exp(5.6845)
= $294.27
Bottom border of price channel:
Exp(Y1,132)
= Exp(a + b × X1,132 – 2 × s)
= Exp(a + b × 1,642 – 2 × s)
= Exp(4.6899 + 0.0005 × 1,642 – 2 × 0.0797)
= Exp(5.3658)
= $213.97
November 3, 2022 calculations
Top border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 + 2 × s)
= Exp(a + b × 1,823 + 2 × s)
= Exp(4.6899 + 0.0005 × 1,823 + 2 × 0.0797)
= Exp(5.7766)
= $322.65
Bottom border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 – 2 × s)
= Exp(a + b × 1,823 – 2 × s)
= Exp(4.6899 + 0.0005 × 1,823 – 2 × 0.0797)
= Exp(5.4579)
= $234.60
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 20.40% per annum.
- ABMD price at the close of November 3, 2022 was higher than the top border of the secondary price channel by $50.98 (15.80%).
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- Check the power of mathematical statistics.
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