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 17.97% per annum.
- CVS price at the close of February 20, 2025 was $65.09 and was higher than the top border of the primary price channel by $3.51 (5.71%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 1,019.56% per annum.
- CVS price at the close of February 20, 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 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 10, 2021
End date: February 11, 2025
a = 4.9458
b = -0.0005
s = 0.0828
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0005) – 1
= -17.97%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0828) – 1
= 39.26%
December 10, 2021 calculations
Top border of price channel:
Exp(Y456)
= Exp(a + b × X456 + 2 × s)
= Exp(a + b × 658 + 2 × s)
= Exp(4.9458 + -0.0005 × 658 + 2 × 0.0828)
= Exp(4.7542)
= $116.08
Bottom border of price channel:
Exp(Y456)
= Exp(a + b × X456 – 2 × s)
= Exp(a + b × 658 – 2 × s)
= Exp(4.9458 + -0.0005 × 658 – 2 × 0.0828)
= Exp(4.4231)
= $83.35
February 11, 2025 calculations
Top border of price channel:
Exp(Y1,250)
= Exp(a + b × X1,250 + 2 × s)
= Exp(a + b × 1,817 + 2 × s)
= Exp(4.9458 + -0.0005 × 1,817 + 2 × 0.0828)
= Exp(4.1252)
= $61.88
Bottom border of price channel:
Exp(Y1,250)
= Exp(a + b × X1,250 – 2 × s)
= Exp(a + b × 1,817 – 2 × s)
= Exp(4.9458 + -0.0005 × 1,817 – 2 × 0.0828)
= Exp(3.7940)
= $44.43
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 17.97% per annum.
- CVS price at the close of February 20, 2025 was $65.09 and was higher than the top border of the primary price channel by $3.51 (5.71%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: December 17, 2024
End date: February 20, 2025
a = -7.9274
b = 0.0066
s = 0.0442
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0066) – 1
= 1,019.56%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0442) – 1
= 19.36%
December 17, 2024 calculations
Top border of price channel:
Exp(Y1,214)
= Exp(a + b × X1,214 + 2 × s)
= Exp(a + b × 1,761 + 2 × s)
= Exp(-7.9274 + 0.0066 × 1,761 + 2 × 0.0442)
= Exp(3.8151)
= $45.38
Bottom border of price channel:
Exp(Y1,214)
= Exp(a + b × X1,214 – 2 × s)
= Exp(a + b × 1,761 – 2 × s)
= Exp(-7.9274 + 0.0066 × 1,761 – 2 × 0.0442)
= Exp(3.6381)
= $38.02
February 20, 2025 calculations
Top border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(-7.9274 + 0.0066 × 1,826 + 2 × 0.0442)
= Exp(4.2453)
= $69.78
Bottom border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(-7.9274 + 0.0066 × 1,826 – 2 × 0.0442)
= Exp(4.0683)
= $58.46
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 1,019.56% per annum.
- CVS price at the close of February 20, 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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