Hello traders,
I will let you one secret why many institutions are
LONG and BULLISH on Valeant Pharmaceuticals.It's alghorithmic trading. Math/Numbers don't lie.
Ever heard of Linear Regression in math/algo trading? Most institutional High Frequency Trading platforms are built on it. Linear Regression gives statistical edge to traders.
In statistics, linear regression is an approach for modeling the relationship between a scalar dependent variable y and one or more explanatory variables (or independent variables) denoted X. The case of one explanatory variable is called simple linear regression.
"Slope" indicator is based on Linear Regression. Linear regression is the least squares estimator of a linear regression model with a single explanatory variable. In other words, simple linear regression fits a straight line through the set of n points in such a way that makes the sum of squared residuals of the model (that is, vertical distances between the points of the data set and the fitted line) as small as possible.
Chart School has a more detailed explanation of
"Slope: Linear Regression."
Now take a look at VRX chart with 10-day Simple Moving Average + Linear Regression/Slope:
https://stockcharts.com/h-sc/ui?s=VRX.TO&p=D&yr=0&mn=6&dy=0&id=p91035846877 Regardless weakening selling pressure, math and numbers don't lie -
Linear Regression Slope points upside for VRX and weakening bearish sentiment.
"Slope" is nearing 0, which is positive for bulls. Once it hits and crosses 0, providing that VRX price is above 10-day moving average, it's game over for bears.
We're getting there.