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 32.40% per annum.
- BBY price at the close of December 6, 2022 was $83.28 and was higher than the top border of the primary price channel by $2.60 (3.22%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 681.39% per annum.
- BBY price at the close of December 6, 2022 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 BBY 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: March 19, 2021
End date: November 21, 2022
a = 6.1727
b = -0.0011
s = 0.0877
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0011) – 1
= -32.40%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0877) – 1
= 41.99%
March 19, 2021 calculations
Top border of price channel:
Exp(Y824)
= Exp(a + b × X824 + 2 × s)
= Exp(a + b × 1,198 + 2 × s)
= Exp(6.1727 + -0.0011 × 1,198 + 2 × 0.0877)
= Exp(5.0630)
= $158.06
Bottom border of price channel:
Exp(Y824)
= Exp(a + b × X824 – 2 × s)
= Exp(a + b × 1,198 – 2 × s)
= Exp(6.1727 + -0.0011 × 1,198 – 2 × 0.0877)
= Exp(4.7124)
= $111.32
November 21, 2022 calculations
Top border of price channel:
Exp(Y1,247)
= Exp(a + b × X1,247 + 2 × s)
= Exp(a + b × 1,810 + 2 × s)
= Exp(6.1727 + -0.0011 × 1,810 + 2 × 0.0877)
= Exp(4.4066)
= $81.99
Bottom border of price channel:
Exp(Y1,247)
= Exp(a + b × X1,247 – 2 × s)
= Exp(a + b × 1,810 – 2 × s)
= Exp(6.1727 + -0.0011 × 1,810 – 2 × 0.0877)
= Exp(4.0559)
= $57.74
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 32.40% per annum.
- BBY price at the close of December 6, 2022 was $83.28 and was higher than the top border of the primary price channel by $2.60 (3.22%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: October 10, 2022
End date: December 6, 2022
a = -5.8504
b = 0.0056
s = 0.0401
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0056) – 1
= 681.39%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0401) – 1
= 17.41%
October 10, 2022 calculations
Top border of price channel:
Exp(Y1,217)
= Exp(a + b × X1,217 + 2 × s)
= Exp(a + b × 1,768 + 2 × s)
= Exp(-5.8504 + 0.0056 × 1,768 + 2 × 0.0401)
= Exp(4.1883)
= $65.91
Bottom border of price channel:
Exp(Y1,217)
= Exp(a + b × X1,217 – 2 × s)
= Exp(a + b × 1,768 – 2 × s)
= Exp(-5.8504 + 0.0056 × 1,768 – 2 × 0.0401)
= Exp(4.0278)
= $56.14
December 6, 2022 calculations
Top border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 + 2 × s)
= Exp(a + b × 1,825 + 2 × s)
= Exp(-5.8504 + 0.0056 × 1,825 + 2 × 0.0401)
= Exp(4.5094)
= $90.86
Bottom border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 – 2 × s)
= Exp(a + b × 1,825 – 2 × s)
= Exp(-5.8504 + 0.0056 × 1,825 – 2 × 0.0401)
= Exp(4.3489)
= $77.39
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 681.39% per annum.
- BBY price at the close of December 6, 2022 was inside the secondary price channel.
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