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 25.73% per annum.
- CARR price at the close of April 26, 2023 was $40.65 and was higher than the top border of the primary price channel by $2.27 (5.92%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is increasing.
- The growth rate of the secondary trend is 24.07% per annum.
- CARR price at the close of April 26, 2023 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 CARR 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: May 28, 2021
End date: November 9, 2022
a = 4.3884
b = -0.0008
s = 0.0912
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0008) – 1
= -25.73%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0912) – 1
= 44.04%
May 28, 2021 calculations
Top border of price channel:
Exp(Y301)
= Exp(a + b × X301 + 2 × s)
= Exp(a + b × 435 + 2 × s)
= Exp(4.3884 + -0.0008 × 435 + 2 × 0.0912)
= Exp(4.2163)
= $67.78
Bottom border of price channel:
Exp(Y301)
= Exp(a + b × X301 – 2 × s)
= Exp(a + b × 435 – 2 × s)
= Exp(4.3884 + -0.0008 × 435 – 2 × 0.0912)
= Exp(3.8514)
= $47.06
November 9, 2022 calculations
Top border of price channel:
Exp(Y667)
= Exp(a + b × X667 + 2 × s)
= Exp(a + b × 965 + 2 × s)
= Exp(4.3884 + -0.0008 × 965 + 2 × 0.0912)
= Exp(3.7844)
= $44.01
Bottom border of price channel:
Exp(Y667)
= Exp(a + b × X667 – 2 × s)
= Exp(a + b × 965 – 2 × s)
= Exp(4.3884 + -0.0008 × 965 – 2 × 0.0912)
= Exp(3.4194)
= $30.55
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 25.73% per annum.
- CARR price at the close of April 26, 2023 was $40.65 and was higher than the top border of the primary price channel by $2.27 (5.92%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: April 28, 2022
End date: April 25, 2023
a = 3.1488
b = 0.0006
s = 0.0610
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0006) – 1
= 24.07%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0610) – 1
= 27.66%
April 28, 2022 calculations
Top border of price channel:
Exp(Y532)
= Exp(a + b × X532 + 2 × s)
= Exp(a + b × 770 + 2 × s)
= Exp(3.1488 + 0.0006 × 770 + 2 × 0.0610)
= Exp(3.7259)
= $41.51
Bottom border of price channel:
Exp(Y532)
= Exp(a + b × X532 – 2 × s)
= Exp(a + b × 770 – 2 × s)
= Exp(3.1488 + 0.0006 × 770 – 2 × 0.0610)
= Exp(3.4818)
= $32.52
April 25, 2023 calculations
Top border of price channel:
Exp(Y780)
= Exp(a + b × X780 + 2 × s)
= Exp(a + b × 1,132 + 2 × s)
= Exp(3.1488 + 0.0006 × 1,132 + 2 × 0.0610)
= Exp(3.9399)
= $51.41
Bottom border of price channel:
Exp(Y780)
= Exp(a + b × X780 – 2 × s)
= Exp(a + b × 1,132 – 2 × s)
= Exp(3.1488 + 0.0006 × 1,132 – 2 × 0.0610)
= Exp(3.6957)
= $40.27
Description
- The secondary trend is increasing.
- The growth rate of the secondary trend is 24.07% per annum.
- CARR price at the close of April 26, 2023 was inside the secondary price channel.
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