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STATISTICS


Disney Reverses Downtrend

01/16/13 10:28:37 AM
by Alan R. Northam

Intermediate-term statistical analysis shows Walt Disney entering an intermediate-term uptrend.

Security:   DIS
Position:   N/A

Figure 1 below shows the daily price bars of Disney (DIS) in the bottom window. The top window shows the linear regression slope Indicator and the middle window, the R-squared indicator.

FIGURE 1: DIS, DAILY. This chart shows the daily price chart of Disney in the lower window along with its 50-day linear regression trendline and its associated channel lines. The top window shows the linear regression slope indicator followed by the R-squared indicator in the next lower window.
Graphic provided by: MetaStock.
 
This figure shows that the linear regression slope indicator in the top window has crossed above its zero line to indicate a reversal in trend from an intermediate-term downtrend to an intermediate-term uptrend.

The R-squared indicator in the middle window shows it has crossed above the critical level to indicate a statistically significant trend. A statistically significant trend is one that has a 95% statistical confidence level of continuing.

The bottom window shows the daily price bars of DIS. This window also shows the 50-day linear regression trendline (blue line) along with the upper 1 sigma channel line (red dotted line), the upper 2 sigma channel line (solid red line), the lower 1 sigma channel (green dotted line), the lower 2 sigma channel line (solid green line), and the lower 3 sigma channel line (dashed green line). The red channel lines represent resistance lines and the green channel lines represent support.

In the bottom window, note that price broke out above the +3 sigma channel line five days ago, signaling a reversal in the intermediate-term trend from down to up. The reversal is complete once the linear regression slope indicator is above its zero line and the R-squared indicator has moved above its critical level. Thus, Figure 1 shows that Disney has now reversed its downtrend and has started a new intermediate-term uptrend.



Alan R. Northam

Alan Northam lives in the Dallas, Texas area and as an electronic engineer gave him an analytical mind from which he has developed a thorough knowledge of stock market technical analysis. His abilities to analyze the future direction of the stock market has allowed him to successfully trade of his own portfolio over the last 30 years. Mr. Northam is now retired and trading the stock market full time. You can reach him at inquiry@tradersclassroom.com or by visiting his website at http://www.tradersclassroom.com. You can also follow him on Twitter @TradersClassrm.

Garland, Tx
Website: www.tradersclassroom.com
E-mail address: inquiry@tradersclassroom.com

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