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 52.66% per annum.
- RH price at the close of May 26, 2023 was $246.82 and was higher than the top border of the primary price channel by $28.53 (13.07%). This indicates a possible reversal in the primary trend direction.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 2.30% per annum.
- RH price at the close of May 26, 2023 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 RH 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 26, 2021
End date: January 3, 2023
a = 8.8162
b = -0.0020
s = 0.1522
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0020) – 1
= -52.66%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.1522) – 1
= 83.81%
March 26, 2021 calculations
Top border of price channel:
Exp(Y712)
= Exp(a + b × X712 + 2 × s)
= Exp(a + b × 1,032 + 2 × s)
= Exp(8.8162 + -0.0020 × 1,032 + 2 × 0.1522)
= Exp(7.0063)
= $1,103.59
Bottom border of price channel:
Exp(Y712)
= Exp(a + b × X712 – 2 × s)
= Exp(a + b × 1,032 – 2 × s)
= Exp(8.8162 + -0.0020 × 1,032 – 2 × 0.1522)
= Exp(6.3976)
= $600.41
January 3, 2023 calculations
Top border of price channel:
Exp(Y1,158)
= Exp(a + b × X1,158 + 2 × s)
= Exp(a + b × 1,680 + 2 × s)
= Exp(8.8162 + -0.0020 × 1,680 + 2 × 0.1522)
= Exp(5.6788)
= $292.59
Bottom border of price channel:
Exp(Y1,158)
= Exp(a + b × X1,158 – 2 × s)
= Exp(a + b × 1,680 – 2 × s)
= Exp(8.8162 + -0.0020 × 1,680 – 2 × 0.1522)
= Exp(5.0701)
= $159.19
Description
- The primary trend is decreasing.
- The decline rate of the primary trend is 52.66% per annum.
- RH price at the close of May 26, 2023 was $246.82 and was higher than the top border of the primary price channel by $28.53 (13.07%). This indicates a possible reversal in the primary trend direction.
Secondary Trend
Start date: May 5, 2022
End date: May 26, 2023
a = 5.6981
b = -0.0001
s = 0.0922
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0001) – 1
= -2.30%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0922) – 1
= 44.63%
May 5, 2022 calculations
Top border of price channel:
Exp(Y992)
= Exp(a + b × X992 + 2 × s)
= Exp(a + b × 1,437 + 2 × s)
= Exp(5.6981 + -0.0001 × 1,437 + 2 × 0.0922)
= Exp(5.7910)
= $327.34
Bottom border of price channel:
Exp(Y992)
= Exp(a + b × X992 – 2 × s)
= Exp(a + b × 1,437 – 2 × s)
= Exp(5.6981 + -0.0001 × 1,437 – 2 × 0.0922)
= Exp(5.4220)
= $226.33
May 26, 2023 calculations
Top border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 + 2 × s)
= Exp(a + b × 1,823 + 2 × s)
= Exp(5.6981 + -0.0001 × 1,823 + 2 × 0.0922)
= Exp(5.7664)
= $319.38
Bottom border of price channel:
Exp(Y1,258)
= Exp(a + b × X1,258 – 2 × s)
= Exp(a + b × 1,823 – 2 × s)
= Exp(5.6981 + -0.0001 × 1,823 – 2 × 0.0922)
= Exp(5.3974)
= $220.83
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 2.30% per annum.
- RH price at the close of May 26, 2023 was inside the secondary price channel.