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 February 20, 2025 was $350.02 and was inside the primary price channel.
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 17.77% per annum.
- SHW price at the close of February 20, 2025 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 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 = 4.6166
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(Y646)
= Exp(a + b × X646 + 2 × s)
= Exp(a + b × 936 + 2 × s)
= Exp(4.6166 + 0.0007 × 936 + 2 × 0.0656)
= Exp(5.4468)
= $232.01
Bottom border of price channel:
Exp(Y646)
= Exp(a + b × X646 – 2 × s)
= Exp(a + b × 936 – 2 × s)
= Exp(4.6166 + 0.0007 × 936 – 2 × 0.0656)
= Exp(5.1844)
= $178.47
December 18, 2024 calculations
Top border of price channel:
Exp(Y1,215)
= Exp(a + b × X1,215 + 2 × s)
= Exp(a + b × 1,762 + 2 × s)
= Exp(4.6166 + 0.0007 × 1,762 + 2 × 0.0656)
= Exp(6.0636)
= $429.94
Bottom border of price channel:
Exp(Y1,215)
= Exp(a + b × X1,215 – 2 × s)
= Exp(a + b × 1,762 – 2 × s)
= Exp(4.6166 + 0.0007 × 1,762 – 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 February 20, 2025 was $350.02 and was inside the primary price channel.
Secondary Trend
Start date: September 10, 2024
End date: February 20, 2025
a = 6.8399
b = -0.0005
s = 0.0376
Annual growth rate:
Exp(365 × b) – 1
= Exp(365 × -0.0005) – 1
= -17.77%
Price channel spread:
Exp(4 × s) – 1
= Exp(4 × 0.0376) – 1
= 16.21%
September 10, 2024 calculations
Top border of price channel:
Exp(Y1,145)
= Exp(a + b × X1,145 + 2 × s)
= Exp(a + b × 1,663 + 2 × s)
= Exp(6.8399 + -0.0005 × 1,663 + 2 × 0.0376)
= Exp(6.0239)
= $413.19
Bottom border of price channel:
Exp(Y1,145)
= Exp(a + b × X1,145 – 2 × s)
= Exp(a + b × 1,663 – 2 × s)
= Exp(6.8399 + -0.0005 × 1,663 – 2 × 0.0376)
= Exp(5.8737)
= $355.54
February 20, 2025 calculations
Top border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 + 2 × s)
= Exp(a + b × 1,826 + 2 × s)
= Exp(6.8399 + -0.0005 × 1,826 + 2 × 0.0376)
= Exp(5.9366)
= $378.63
Bottom border of price channel:
Exp(Y1,256)
= Exp(a + b × X1,256 – 2 × s)
= Exp(a + b × 1,826 – 2 × s)
= Exp(6.8399 + -0.0005 × 1,826 – 2 × 0.0376)
= Exp(5.7863)
= $325.81
Description
- The secondary trend is decreasing.
- The decline rate of the secondary trend is 17.77% per annum.
- SHW price at the close of February 20, 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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