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 1.59% per annum.
- HON price at the close of May 17, 2024 was $205.97 and was inside the primary price channel.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 4.07% per annum.
- HON price at the close of May 17, 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 HON 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: November 13, 2020
End date: May 9, 2024
a = 5.3193
b = 0.0000
s = 0.0625
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0000) – 1
= -1.59%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0625) – 1
= 28.42%
November 13, 2020 calculations
Top border of price channel:
Exp(Y377)
= Exp(a + b × X377 + 2 × s)
= Exp(a + b × 543 + 2 × s)
= Exp(5.3193 + 0.0000 × 543 + 2 × 0.0625)
= Exp(5.4206)
= $226.01
Bottom border of price channel:
Exp(Y377)
= Exp(a + b × X377 – 2 × s)
= Exp(a + b × 543 – 2 × s)
= Exp(5.3193 + 0.0000 × 543 – 2 × 0.0625)
= Exp(5.1704)
= $175.99
May 9, 2024 calculations
Top border of price channel:
Exp(Y1,252)
= Exp(a + b × X1,252 + 2 × s)
= Exp(a + b × 1,816 + 2 × s)
= Exp(5.3193 + 0.0000 × 1,816 + 2 × 0.0625)
= Exp(5.3648)
= $213.74
Bottom border of price channel:
Exp(Y1,252)
= Exp(a + b × X1,252 – 2 × s)
= Exp(a + b × 1,816 – 2 × s)
= Exp(5.3193 + 0.0000 × 1,816 – 2 × 0.0625)
= Exp(5.1146)
= $166.44
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 1.59% per annum.
- HON price at the close of May 17, 2024 was $205.97 and was inside the primary price channel.
Secondary Trend
Start date: February 3, 2022
End date: May 17, 2024
a = 5.0888
b = 0.0001
s = 0.0520
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0001) – 1
= 4.07%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0520) – 1
= 23.14%
February 3, 2022 calculations
Top border of price channel:
Exp(Y684)
= Exp(a + b × X684 + 2 × s)
= Exp(a + b × 990 + 2 × s)
= Exp(5.0888 + 0.0001 × 990 + 2 × 0.0520)
= Exp(5.3012)
= $200.58
Bottom border of price channel:
Exp(Y684)
= Exp(a + b × X684 – 2 × s)
= Exp(a + b × 990 – 2 × s)
= Exp(5.0888 + 0.0001 × 990 – 2 × 0.0520)
= Exp(5.0931)
= $162.89
May 17, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,824 + 2 × s)
= Exp(5.0888 + 0.0001 × 1,824 + 2 × 0.0520)
= Exp(5.3924)
= $219.74
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,824 – 2 × s)
= Exp(5.0888 + 0.0001 × 1,824 – 2 × 0.0520)
= Exp(5.1843)
= $178.45
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 4.07% per annum.
- HON price at the close of May 17, 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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