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 41.69% per annum.
- EW price at the close of February 14, 2022 was $107.73 and was lower than the bottom border of the primary price channel by $4.80 (4.27%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 87.69% per annum.
- EW price at the close of February 14, 2022 was higher than the top border of the secondary price channel by $4.31 (4.17%). 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 EW 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: March 9, 2020
End date: January 14, 2022
a = 3.1049
b = 0.0010
s = 0.0619
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0010) – 1
= 41.69%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0619) – 1
= 28.10%
March 9, 2020 calculations
Top border of price channel:
Exp(Y769)
= Exp(a + b × X769 + 2 × s)
= Exp(a + b × 1,118 + 2 × s)
= Exp(3.1049 + 0.0010 × 1,118 + 2 × 0.0619)
= Exp(4.2960)
= $73.41
Bottom border of price channel:
Exp(Y769)
= Exp(a + b × X769 – 2 × s)
= Exp(a + b × 1,118 – 2 × s)
= Exp(3.1049 + 0.0010 × 1,118 – 2 × 0.0619)
= Exp(4.0483)
= $57.30
January 14, 2022 calculations
Top border of price channel:
Exp(Y1,238)
= Exp(a + b × X1,238 + 2 × s)
= Exp(a + b × 1,794 + 2 × s)
= Exp(3.1049 + 0.0010 × 1,794 + 2 × 0.0619)
= Exp(4.9413)
= $139.96
Bottom border of price channel:
Exp(Y1,238)
= Exp(a + b × X1,238 – 2 × s)
= Exp(a + b × 1,794 – 2 × s)
= Exp(3.1049 + 0.0010 × 1,794 – 2 × 0.0619)
= Exp(4.6937)
= $109.25
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 41.69% per annum.
- EW price at the close of February 14, 2022 was $107.73 and was lower than the bottom border of the primary price channel by $4.80 (4.27%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: December 22, 2021
End date: February 1, 2022
a = 15.0628
b = -0.0057
s = 0.0240
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0057) – 1
= -87.69%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0240) – 1
= 10.06%
December 22, 2021 calculations
Top border of price channel:
Exp(Y1,222)
= Exp(a + b × X1,222 + 2 × s)
= Exp(a + b × 1,771 + 2 × s)
= Exp(15.0628 + -0.0057 × 1,771 + 2 × 0.0240)
= Exp(4.9486)
= $140.98
Bottom border of price channel:
Exp(Y1,222)
= Exp(a + b × X1,222 – 2 × s)
= Exp(a + b × 1,771 – 2 × s)
= Exp(15.0628 + -0.0057 × 1,771 – 2 × 0.0240)
= Exp(4.8528)
= $128.10
February 1, 2022 calculations
Top border of price channel:
Exp(Y1,249)
= Exp(a + b × X1,249 + 2 × s)
= Exp(a + b × 1,812 + 2 × s)
= Exp(15.0628 + -0.0057 × 1,812 + 2 × 0.0240)
= Exp(4.7134)
= $111.43
Bottom border of price channel:
Exp(Y1,249)
= Exp(a + b × X1,249 – 2 × s)
= Exp(a + b × 1,812 – 2 × s)
= Exp(15.0628 + -0.0057 × 1,812 – 2 × 0.0240)
= Exp(4.6175)
= $101.24
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 87.69% per annum.
- EW price at the close of February 14, 2022 was higher than the top border of the secondary price channel by $4.31 (4.17%). This indicates a possible reversal in the secondary trend direction.
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