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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: TobaccoMan who wrote (4844)	1/19/1998 9:05:00 PM
From: LastShadow	Read Replies (1) \| Respond to of 120523

Linear Regression: The following URL has a nice explanation of linear regression, although it concentrates on using LR Channels in the same manner I use simpler (and more effective) trendlines. equis.com I use LR to determine the mean price for an equity over some set period. For example, If a stock swings between 10 and 30 over a 6 month period, and is presently at say 18 after a small jump I might use LR to determine what a reasonable 'good' exit price may be by running the LR from today back in time until it becomes level. Note, the stocks price swings would have to be such that the resulting line does at some time frame go flat, as opposed to down or up - although those results would tell me either not to enter or do more analysis to determine reversal points. This is essentially a sophisticate method of 'eyeballing' the mean price, and gives me a starting point, rather than an end point for my determination of entries and exits. Those numbers get polished with other analyses. But, for example in Jenna's recent inquiry, if I run an LR for 6 months for GE and find the level LR is 69 and the stock is swinging between 58 and 78 and is now at 71, I know that I should wait for it to go below that number before reconsidering price potential (or short if its too high above it). If on the other hand, say GM's linear regression is 62 and the price is now 55 one week after taking a dump, with tons of volume and fair outlook, I can be pretty sure that the price will recover to that in a month or so. This helps for options analysis also. Although I rarely ever do options since my analysis isnt geared to that. This doesn't help on new issues, or as well on thinly traded stocks. lastshadow