Stock Price Trends
Stock price trends estimated using linear regression.
Summary
Key facts
- The primary trend is increasing.
- The growth rate of the primary trend is 30.06% per annum.
- LIN price at the close of April 25, 2024 was $443.83 and was inside the primary price channel.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 42.90% per annum.
- LIN price at the close of April 25, 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 LIN 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: June 28, 2022
End date: April 25, 2024
a = 4.8051
b = 0.0007
s = 0.0418
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0007) – 1
= 30.06%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0418) – 1
= 18.18%
June 28, 2022 calculations
Top border of price channel:
Exp(Y799)
= Exp(a + b × X799 + 2 × s)
= Exp(a + b × 1,159 + 2 × s)
= Exp(4.8051 + 0.0007 × 1,159 + 2 × 0.0418)
= Exp(5.7232)
= $305.88
Bottom border of price channel:
Exp(Y799)
= Exp(a + b × X799 – 2 × s)
= Exp(a + b × 1,159 – 2 × s)
= Exp(4.8051 + 0.0007 × 1,159 – 2 × 0.0418)
= Exp(5.5561)
= $258.82
April 25, 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(4.8051 + 0.0007 × 1,826 + 2 × 0.0418)
= Exp(6.2034)
= $494.45
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(4.8051 + 0.0007 × 1,826 – 2 × 0.0418)
= Exp(6.0364)
= $418.38
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 30.06% per annum.
- LIN price at the close of April 25, 2024 was $443.83 and was inside the primary price channel.
Secondary Trend
Start date: March 12, 2024
End date: April 25, 2024
a = 8.8975
b = -0.0015
s = 0.0070
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0015) – 1
= -42.90%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0070) – 1
= 2.85%
March 12, 2024 calculations
Top border of price channel:
Exp(Y1,227)
= Exp(a + b × X1,227 + 2 × s)
= Exp(a + b × 1,782 + 2 × s)
= Exp(8.8975 + -0.0015 × 1,782 + 2 × 0.0070)
= Exp(6.1762)
= $481.15
Bottom border of price channel:
Exp(Y1,227)
= Exp(a + b × X1,227 – 2 × s)
= Exp(a + b × 1,782 – 2 × s)
= Exp(8.8975 + -0.0015 × 1,782 – 2 × 0.0070)
= Exp(6.1481)
= $467.81
April 25, 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(8.8975 + -0.0015 × 1,826 + 2 × 0.0070)
= Exp(6.1086)
= $449.72
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(8.8975 + -0.0015 × 1,826 – 2 × 0.0070)
= Exp(6.0805)
= $437.25
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 42.90% per annum.
- LIN price at the close of April 25, 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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