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 31.33% per annum.
- SHW price at the close of January 17, 2025 was $353.98 and was inside the primary price channel.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 62.83% per annum.
- SHW price at the close of January 17, 2025 was higher than the top border of the secondary price channel by $3.33 (0.95%). 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 SHW 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: September 14, 2022
End date: December 18, 2024
a = 4.5935
b = 0.0007
s = 0.0656
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × 0.0007) – 1
= 31.33%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0656) – 1
= 30.00%
September 14, 2022 calculations
Top border of price channel:
Exp(Y668)
= Exp(a + b × X668 + 2 × s)
= Exp(a + b × 967 + 2 × s)
= Exp(4.5935 + 0.0007 × 967 + 2 × 0.0656)
= Exp(5.4468)
= $232.01
Bottom border of price channel:
Exp(Y668)
= Exp(a + b × X668 – 2 × s)
= Exp(a + b × 967 – 2 × s)
= Exp(4.5935 + 0.0007 × 967 – 2 × 0.0656)
= Exp(5.1844)
= $178.47
December 18, 2024 calculations
Top border of price channel:
Exp(Y1,237)
= Exp(a + b × X1,237 + 2 × s)
= Exp(a + b × 1,793 + 2 × s)
= Exp(4.5935 + 0.0007 × 1,793 + 2 × 0.0656)
= Exp(6.0636)
= $429.94
Bottom border of price channel:
Exp(Y1,237)
= Exp(a + b × X1,237 – 2 × s)
= Exp(a + b × 1,793 – 2 × s)
= Exp(4.5935 + 0.0007 × 1,793 – 2 × 0.0656)
= Exp(5.8013)
= $330.71
Description
- The primary trend is increasing.
- The growth rate of the primary trend is 31.33% per annum.
- SHW price at the close of January 17, 2025 was $353.98 and was inside the primary price channel.
Secondary Trend
Start date: November 7, 2024
End date: January 14, 2025
a = 10.7416
b = -0.0027
s = 0.0307
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0027) – 1
= -62.83%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0307) – 1
= 13.05%
November 7, 2024 calculations
Top border of price channel:
Exp(Y1,209)
= Exp(a + b × X1,209 + 2 × s)
= Exp(a + b × 1,752 + 2 × s)
= Exp(10.7416 + -0.0027 × 1,752 + 2 × 0.0307)
= Exp(6.0523)
= $425.10
Bottom border of price channel:
Exp(Y1,209)
= Exp(a + b × X1,209 – 2 × s)
= Exp(a + b × 1,752 – 2 × s)
= Exp(10.7416 + -0.0027 × 1,752 – 2 × 0.0307)
= Exp(5.9297)
= $376.03
January 14, 2025 calculations
Top border of price channel:
Exp(Y1,253)
= Exp(a + b × X1,253 + 2 × s)
= Exp(a + b × 1,820 + 2 × s)
= Exp(10.7416 + -0.0027 × 1,820 + 2 × 0.0307)
= Exp(5.8679)
= $353.52
Bottom border of price channel:
Exp(Y1,253)
= Exp(a + b × X1,253 – 2 × s)
= Exp(a + b × 1,820 – 2 × s)
= Exp(10.7416 + -0.0027 × 1,820 – 2 × 0.0307)
= Exp(5.7453)
= $312.71
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 62.83% per annum.
- SHW price at the close of January 17, 2025 was higher than the top border of the secondary price channel by $3.33 (0.95%). This indicates a possible reversal in the secondary trend direction.
- Discover a new approach to trend analysis.
- Check the power of mathematical statistics.
- Price channels have never been so accurately estimated.
Check out SHW and 1,499 other stocks on our new website