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 38.14% per annum.
- LMT price at the close of May 9, 2025 was $473.52 and was higher than the top border of the primary price channel by $17.76 (3.90%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 27.06% per annum.
- LMT price at the close of May 9, 2025 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 LMT 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 12, 2024
End date: April 8, 2025
a = 8.4301
b = -0.0013
s = 0.0460
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0013) – 1
= -38.14%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0460) – 1
= 20.20%
August 12, 2024 calculations
Top border of price channel:
Exp(Y1,070)
= Exp(a + b × X1,070 + 2 × s)
= Exp(a + b × 1,554 + 2 × s)
= Exp(8.4301 + -0.0013 × 1,554 + 2 × 0.0460)
= Exp(6.4773)
= $650.18
Bottom border of price channel:
Exp(Y1,070)
= Exp(a + b × X1,070 – 2 × s)
= Exp(a + b × 1,554 – 2 × s)
= Exp(8.4301 + -0.0013 × 1,554 – 2 × 0.0460)
= Exp(6.2933)
= $540.92
April 8, 2025 calculations
Top border of price channel:
Exp(Y1,234)
= Exp(a + b × X1,234 + 2 × s)
= Exp(a + b × 1,793 + 2 × s)
= Exp(8.4301 + -0.0013 × 1,793 + 2 × 0.0460)
= Exp(6.1628)
= $474.74
Bottom border of price channel:
Exp(Y1,234)
= Exp(a + b × X1,234 – 2 × s)
= Exp(a + b × 1,793 – 2 × s)
= Exp(8.4301 + -0.0013 × 1,793 – 2 × 0.0460)
= Exp(5.9788)
= $394.95
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 38.14% per annum.
- LMT price at the close of May 9, 2025 was $473.52 and was higher than the top border of the primary price channel by $17.76 (3.90%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: January 28, 2025
End date: May 9, 2025
a = 4.9571
b = 0.0007
s = 0.0279
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0007) – 1
= 27.06%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0279) – 1
= 11.81%
January 28, 2025 calculations
Top border of price channel:
Exp(Y1,185)
= Exp(a + b × X1,185 + 2 × s)
= Exp(a + b × 1,723 + 2 × s)
= Exp(4.9571 + 0.0007 × 1,723 + 2 × 0.0279)
= Exp(6.1435)
= $465.66
Bottom border of price channel:
Exp(Y1,185)
= Exp(a + b × X1,185 – 2 × s)
= Exp(a + b × 1,723 – 2 × s)
= Exp(4.9571 + 0.0007 × 1,723 – 2 × 0.0279)
= Exp(6.0318)
= $416.48
May 9, 2025 calculations
Top border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 + 2 × s)
= Exp(a + b × 1,824 + 2 × s)
= Exp(4.9571 + 0.0007 × 1,824 + 2 × 0.0279)
= Exp(6.2097)
= $497.57
Bottom border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 – 2 × s)
= Exp(a + b × 1,824 – 2 × s)
= Exp(4.9571 + 0.0007 × 1,824 – 2 × 0.0279)
= Exp(6.0981)
= $445.01
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 27.06% per annum.
- LMT price at the close of May 9, 2025 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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