Research Results – Stocks in Rising and Falling Trends in the Medium Long Term

We have studied how stocks that were in a rising or falling trend at one time have developed over the next three months. Stocks in rising trends were assigned buy signals and stocks in falling trends were assigned sell signals.

Figure 1: Average price development 66 days after the stocks were in rising trends (blue line) and falling trends (red line) in Investtech’s medium long term technical charts. The width of the shaded area is one standard deviation from the average estimator – the narrower the variance area, the better the estimate. Average benchmark development is the black line. Click the images for bigger versions.

ppt: percentage points. The difference between average return from stocks that have triggered signals and average benchmark development.

Stocks in rising trends have a clearly positive price development the next 66 days on average, and price development clearly better than average benchmark development. Similarly stocks in falling trends have developed far weaker than benchmark in the next 66 days.

The calculations are done based on a large data set for a relatively long time period and for four different countries. The uncertainty of the estimate, measured by standard deviation, is fairly low, with high statistical T values. The results are considered robust in spite of the lack of independence between samples (see the Data and Signals section).

If you want to learn more....

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  Rising trend.
  Read the theory and see which stocks are in a rising trend right now.
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  Falling trend.
  Read the theory and see which stocks are in a falling trend right now.