Trend line calculation

[mathfun13]

Hi friends;
I have a question that I couldn’t solve it. I’m interested in stock markets and I want to guess price trend. Please look at the image 1. Highest prices, on Day 9 price was 1290 and 1685 for Day 26. When I draw a line using these two points on the graph paper towards 0 line, I had a line with 109 degree angle. So the question are;

• If I draw this line to the future days, what will be the points value? For example; for Day 29 or 35.
• How can I calculate the angle using these values? (point 1 and 2 and day number)

In order to understand, if it is possible or not to do it. I used real numbers on the graph paper. And I got the price 1829 for Day 35. So I checked it out on the computer looking the stock market datas. I saw that market data and my calculation on the graph paper are same.
Due to there are lots of item in the stock markets It is impossible to do this. If you give some information I want to use it in Excel to calculate.
Thanks a lot for your help.

 

[JeffM]

I fear my answer will not satisfy you.

Inferring a mathematical relationship among variables from given data is a branch of statistics. The simplest of such relationship is

[MATH]y = a + bx[/MATH].

There is a purely mechanical method, called linear regression, to extract the “best“ such model from data. There are also various tests used to determine the degree of reliability of the ”best” line. Most (perhaps all) of the mechanics are available in Excel (especially with the data analysis extension package.) To understand these tools fully, you really need to take a course in statistics.

However, two data points are insufficient to provide any degree of reliability (zero “degrees of freedom“ is the technical term) because it takes two points to determine line so there is zero data available to test the line drawn. Make sense?

Moreover, one of your variables is time. There is virtually no economic data with a linear relationship to time. Look at any graph of stock market prices; it bounces around all over the place. You can fit a linear trend line to stock market data over the short term; it will work well until it doesn’t.

In short, excel has the tools to do what you want mathematically. That does not imply that the results are reliable economically.

 

[mathfun13]

I will search it. Thanks