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 84.05% per annum.
- PANW price at the close of May 17, 2024 was $317.85 and was inside the primary price channel.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 64.53% per annum.
- PANW price at the close of May 17, 2024 was higher than the top border of the secondary price channel by $34.66 (12.24%). 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 PANW 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: October 11, 2022
End date: February 20, 2024
a = 2.8842
b = 0.0017
s = 0.0857
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0017) – 1
= 84.05%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0857) – 1
= 40.90%
October 11, 2022 calculations
Top border of price channel:
Exp(Y856)
= Exp(a + b × X856 + 2 × s)
= Exp(a + b × 1,240 + 2 × s)
= Exp(2.8842 + 0.0017 × 1,240 + 2 × 0.0857)
= Exp(5.1281)
= $168.69
Bottom border of price channel:
Exp(Y856)
= Exp(a + b × X856 – 2 × s)
= Exp(a + b × 1,240 – 2 × s)
= Exp(2.8842 + 0.0017 × 1,240 – 2 × 0.0857)
= Exp(4.7852)
= $119.72
February 20, 2024 calculations
Top border of price channel:
Exp(Y1,196)
= Exp(a + b × X1,196 + 2 × s)
= Exp(a + b × 1,737 + 2 × s)
= Exp(2.8842 + 0.0017 × 1,737 + 2 × 0.0857)
= Exp(5.9587)
= $387.11
Bottom border of price channel:
Exp(Y1,196)
= Exp(a + b × X1,196 – 2 × s)
= Exp(a + b × 1,737 – 2 × s)
= Exp(2.8842 + 0.0017 × 1,737 – 2 × 0.0857)
= Exp(5.6158)
= $274.74
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 84.05% per annum.
- PANW price at the close of May 17, 2024 was $317.85 and was inside the primary price channel.
Secondary Trend
Start date: January 10, 2024
End date: April 22, 2024
a = 10.6892
b = -0.0028
s = 0.0682
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0028) – 1
= -64.53%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0682) – 1
= 31.39%
January 10, 2024 calculations
Top border of price channel:
Exp(Y1,169)
= Exp(a + b × X1,169 + 2 × s)
= Exp(a + b × 1,696 + 2 × s)
= Exp(10.6892 + -0.0028 × 1,696 + 2 × 0.0682)
= Exp(6.0096)
= $407.32
Bottom border of price channel:
Exp(Y1,169)
= Exp(a + b × X1,169 – 2 × s)
= Exp(a + b × 1,696 – 2 × s)
= Exp(10.6892 + -0.0028 × 1,696 – 2 × 0.0682)
= Exp(5.7366)
= $310.01
April 22, 2024 calculations
Top border of price channel:
Exp(Y1,239)
= Exp(a + b × X1,239 + 2 × s)
= Exp(a + b × 1,799 + 2 × s)
= Exp(10.6892 + -0.0028 × 1,799 + 2 × 0.0682)
= Exp(5.7171)
= $304.02
Bottom border of price channel:
Exp(Y1,239)
= Exp(a + b × X1,239 – 2 × s)
= Exp(a + b × 1,799 – 2 × s)
= Exp(10.6892 + -0.0028 × 1,799 – 2 × 0.0682)
= Exp(5.4441)
= $231.39
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 64.53% per annum.
- PANW price at the close of May 17, 2024 was higher than the top border of the secondary price channel by $34.66 (12.24%). 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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