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 21.02% per annum.
- CVS price at the close of April 26, 2024 was $67.18 and was inside the primary price channel.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 14.66% per annum.
- CVS price at the close of April 26, 2024 was lower than the bottom border of the secondary price channel by $2.43 (3.49%). This indicates a possible reversal in the secondary trend direction.
- 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 CVS 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 9, 2021
End date: December 5, 2023
a = 5.2650
b = -0.0006
s = 0.0672
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0006) – 1
= -21.02%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0672) – 1
= 30.83%
December 9, 2021 calculations
Top border of price channel:
Exp(Y661)
= Exp(a + b × X661 + 2 × s)
= Exp(a + b × 955 + 2 × s)
= Exp(5.2650 + -0.0006 × 955 + 2 × 0.0672)
= Exp(4.7820)
= $119.34
Bottom border of price channel:
Exp(Y661)
= Exp(a + b × X661 – 2 × s)
= Exp(a + b × 955 – 2 × s)
= Exp(5.2650 + -0.0006 × 955 – 2 × 0.0672)
= Exp(4.5133)
= $91.22
December 5, 2023 calculations
Top border of price channel:
Exp(Y1,160)
= Exp(a + b × X1,160 + 2 × s)
= Exp(a + b × 1,681 + 2 × s)
= Exp(5.2650 + -0.0006 × 1,681 + 2 × 0.0672)
= Exp(4.3126)
= $74.64
Bottom border of price channel:
Exp(Y1,160)
= Exp(a + b × X1,160 – 2 × s)
= Exp(a + b × 1,681 – 2 × s)
= Exp(5.2650 + -0.0006 × 1,681 – 2 × 0.0672)
= Exp(4.0439)
= $57.05
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 21.02% per annum.
- CVS price at the close of April 26, 2024 was $67.18 and was inside the primary price channel.
Secondary Trend
Start date: April 20, 2023
End date: April 9, 2024
a = 3.6457
b = 0.0004
s = 0.0431
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0004) – 1
= 14.66%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0431) – 1
= 18.84%
April 20, 2023 calculations
Top border of price channel:
Exp(Y1,002)
= Exp(a + b × X1,002 + 2 × s)
= Exp(a + b × 1,452 + 2 × s)
= Exp(3.6457 + 0.0004 × 1,452 + 2 × 0.0431)
= Exp(4.2761)
= $71.96
Bottom border of price channel:
Exp(Y1,002)
= Exp(a + b × X1,002 – 2 × s)
= Exp(a + b × 1,452 – 2 × s)
= Exp(3.6457 + 0.0004 × 1,452 – 2 × 0.0431)
= Exp(4.1035)
= $60.55
April 9, 2024 calculations
Top border of price channel:
Exp(Y1,245)
= Exp(a + b × X1,245 + 2 × s)
= Exp(a + b × 1,807 + 2 × s)
= Exp(3.6457 + 0.0004 × 1,807 + 2 × 0.0431)
= Exp(4.4091)
= $82.20
Bottom border of price channel:
Exp(Y1,245)
= Exp(a + b × X1,245 – 2 × s)
= Exp(a + b × 1,807 – 2 × s)
= Exp(3.6457 + 0.0004 × 1,807 – 2 × 0.0431)
= Exp(4.2365)
= $69.17
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 14.66% per annum.
- CVS price at the close of April 26, 2024 was lower than the bottom border of the secondary price channel by $2.43 (3.49%). This indicates a possible reversal in the secondary trend direction.
- 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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