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 24.86% per annum.
- MCD price at the close of May 16, 2024 was $273.51 and was inside the primary price channel.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 13.53% per annum.
- MCD price at the close of May 16, 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 MCD 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 27, 2023
End date: May 16, 2024
a = 7.0251
b = -0.0008
s = 0.0189
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0008) – 1
= -24.86%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0189) – 1
= 7.87%
December 27, 2023 calculations
Top border of price channel:
Exp(Y1,161)
= Exp(a + b × X1,161 + 2 × s)
= Exp(a + b × 1,685 + 2 × s)
= Exp(7.0251 + -0.0008 × 1,685 + 2 × 0.0189)
= Exp(5.7436)
= $312.17
Bottom border of price channel:
Exp(Y1,161)
= Exp(a + b × X1,161 – 2 × s)
= Exp(a + b × 1,685 – 2 × s)
= Exp(7.0251 + -0.0008 × 1,685 – 2 × 0.0189)
= Exp(5.6678)
= $289.40
May 16, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(7.0251 + -0.0008 × 1,826 + 2 × 0.0189)
= Exp(5.6332)
= $279.54
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(7.0251 + -0.0008 × 1,826 – 2 × 0.0189)
= Exp(5.5574)
= $259.15
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 24.86% per annum.
- MCD price at the close of May 16, 2024 was $273.51 and was inside the primary price channel.
Secondary Trend
Start date: April 4, 2024
End date: May 16, 2024
a = 4.9745
b = 0.0003
s = 0.0113
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0003) – 1
= 13.53%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0113) – 1
= 4.63%
April 4, 2024 calculations
Top border of price channel:
Exp(Y1,228)
= Exp(a + b × X1,228 + 2 × s)
= Exp(a + b × 1,784 + 2 × s)
= Exp(4.9745 + 0.0003 × 1,784 + 2 × 0.0113)
= Exp(5.6175)
= $275.21
Bottom border of price channel:
Exp(Y1,228)
= Exp(a + b × X1,228 – 2 × s)
= Exp(a + b × 1,784 – 2 × s)
= Exp(4.9745 + 0.0003 × 1,784 – 2 × 0.0113)
= Exp(5.5722)
= $263.02
May 16, 2024 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(4.9745 + 0.0003 × 1,826 + 2 × 0.0113)
= Exp(5.6321)
= $279.26
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(4.9745 + 0.0003 × 1,826 – 2 × 0.0113)
= Exp(5.5868)
= $266.89
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 13.53% per annum.
- MCD price at the close of May 16, 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.
Check out MCD and 1,499 other stocks on our new website