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 69.45% per annum.
- LMT price at the close of November 19, 2024 was $533.26 and was lower than the bottom border of the primary price channel by $32.39 (5.73%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 66.16% per annum.
- LMT price at the close of November 19, 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 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: January 24, 2024
End date: October 25, 2024
a = 3.7812
b = 0.0014
s = 0.0407
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0014) – 1
= 69.45%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0407) – 1
= 17.70%
January 24, 2024 calculations
Top border of price channel:
Exp(Y1,049)
= Exp(a + b × X1,049 + 2 × s)
= Exp(a + b × 1,526 + 2 × s)
= Exp(3.7812 + 0.0014 × 1,526 + 2 × 0.0407)
= Exp(6.0675)
= $431.60
Bottom border of price channel:
Exp(Y1,049)
= Exp(a + b × X1,049 – 2 × s)
= Exp(a + b × 1,526 – 2 × s)
= Exp(3.7812 + 0.0014 × 1,526 – 2 × 0.0407)
= Exp(5.9045)
= $366.69
October 25, 2024 calculations
Top border of price channel:
Exp(Y1,240)
= Exp(a + b × X1,240 + 2 × s)
= Exp(a + b × 1,801 + 2 × s)
= Exp(3.7812 + 0.0014 × 1,801 + 2 × 0.0407)
= Exp(6.4648)
= $642.16
Bottom border of price channel:
Exp(Y1,240)
= Exp(a + b × X1,240 – 2 × s)
= Exp(a + b × 1,801 – 2 × s)
= Exp(3.7812 + 0.0014 × 1,801 – 2 × 0.0407)
= Exp(6.3019)
= $545.58
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 69.45% per annum.
- LMT price at the close of November 19, 2024 was $533.26 and was lower than the bottom border of the primary price channel by $32.39 (5.73%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: October 1, 2024
End date: November 19, 2024
a = 11.7005
b = -0.0030
s = 0.0256
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0030) – 1
= -66.16%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0256) – 1
= 10.80%
October 1, 2024 calculations
Top border of price channel:
Exp(Y1,222)
= Exp(a + b × X1,222 + 2 × s)
= Exp(a + b × 1,777 + 2 × s)
= Exp(11.7005 + -0.0030 × 1,777 + 2 × 0.0256)
= Exp(6.4764)
= $649.65
Bottom border of price channel:
Exp(Y1,222)
= Exp(a + b × X1,222 – 2 × s)
= Exp(a + b × 1,777 – 2 × s)
= Exp(11.7005 + -0.0030 × 1,777 – 2 × 0.0256)
= Exp(6.3739)
= $586.33
November 19, 2024 calculations
Top border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(11.7005 + -0.0030 × 1,826 + 2 × 0.0256)
= Exp(6.3310)
= $561.70
Bottom border of price channel:
Exp(Y1,257)
= Exp(a + b × X1,257 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(11.7005 + -0.0030 × 1,826 – 2 × 0.0256)
= Exp(6.2284)
= $506.95
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 66.16% per annum.
- LMT price at the close of November 19, 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 LMT and 1,499 other stocks on our new website