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 62.48% per annum.
- LMT price at the close of January 17, 2025 was $490.32 and was higher than the top border of the primary price channel by $15.25 (3.21%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 24.08% per annum.
- LMT price at the close of January 17, 2025 was inside the secondary price channel.
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 LMT 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 1, 2024
End date: January 10, 2025
a = 11.0194
b = -0.0027
s = 0.0202
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0027) – 1
= -62.48%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0202) – 1
= 8.43%
October 1, 2024 calculations
Top border of price channel:
Exp(Y1,182)
= Exp(a + b × X1,182 + 2 × s)
= Exp(a + b × 1,715 + 2 × s)
= Exp(11.0194 + -0.0027 × 1,715 + 2 × 0.0202)
= Exp(6.4535)
= $634.94
Bottom border of price channel:
Exp(Y1,182)
= Exp(a + b × X1,182 – 2 × s)
= Exp(a + b × 1,715 – 2 × s)
= Exp(11.0194 + -0.0027 × 1,715 – 2 × 0.0202)
= Exp(6.3726)
= $585.57
January 10, 2025 calculations
Top border of price channel:
Exp(Y1,251)
= Exp(a + b × X1,251 + 2 × s)
= Exp(a + b × 1,816 + 2 × s)
= Exp(11.0194 + -0.0027 × 1,816 + 2 × 0.0202)
= Exp(6.1823)
= $484.08
Bottom border of price channel:
Exp(Y1,251)
= Exp(a + b × X1,251 – 2 × s)
= Exp(a + b × 1,816 – 2 × s)
= Exp(11.0194 + -0.0027 × 1,816 – 2 × 0.0202)
= Exp(6.1013)
= $446.44
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 62.48% per annum.
- LMT price at the close of January 17, 2025 was $490.32 and was higher than the top border of the primary price channel by $15.25 (3.21%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: December 12, 2024
End date: January 17, 2025
a = 7.5440
b = -0.0008
s = 0.0164
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0008) – 1
= -24.08%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0164) – 1
= 6.80%
December 12, 2024 calculations
Top border of price channel:
Exp(Y1,233)
= Exp(a + b × X1,233 + 2 × s)
= Exp(a + b × 1,787 + 2 × s)
= Exp(7.5440 + -0.0008 × 1,787 + 2 × 0.0164)
= Exp(6.2279)
= $506.71
Bottom border of price channel:
Exp(Y1,233)
= Exp(a + b × X1,233 – 2 × s)
= Exp(a + b × 1,787 – 2 × s)
= Exp(7.5440 + -0.0008 × 1,787 – 2 × 0.0164)
= Exp(6.1622)
= $474.45
January 17, 2025 calculations
Top border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 + 2 × s)
= Exp(a + b × 1,823 + 2 × s)
= Exp(7.5440 + -0.0008 × 1,823 + 2 × 0.0164)
= Exp(6.2008)
= $493.13
Bottom border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 – 2 × s)
= Exp(a + b × 1,823 – 2 × s)
= Exp(7.5440 + -0.0008 × 1,823 – 2 × 0.0164)
= Exp(6.1350)
= $461.73
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 24.08% per annum.
- LMT price at the close of January 17, 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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