The data I will be using would be the points labelled graphically in an earlier post.
We have here the following data from the monthly charts:
Mar 1994 (zeroth month): 2482.9
Feb 1996 (23rd month): 2504
Mar 2000 (72nd month): 2582.94
May 2006 (145th month): 2666.33
Mar 2008 (168th month): 2745.96
In my linear regression analysis, the variable x shall represent the number of months after Mar 1994. The variable y is the value of STI, excluding inflation.
A simple excel calculation when we consider the linear chart:
A simple excel calculation when we consider the logarithmic (base 10) chart:
As we can see, both linear and log charts point to 2754~2756 as the resistance for this month, Nov 2009.
The linear product correlation for both the linear and log charts stands at a high 0.989, signifying a very strong linear correlation between the Straits Times Index and time line.
Well, isn't that expected of trend-lines? :)
So to me, anything between plus minus 10 from the region of 2755 could potentially be a dangerous zone, or a reversal point. In fact, with this calculations, 2739 might have been the peak.
Any new long-term investment in index stocks now would be 'scraping the bottom of the barrel'. An interim peak looks near.
All I hope is for prices to rise sufficiently for me to exit my pennies with minimal losses, of which paper losses have ballooned from 1k to 3k :(
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