The Crash Point Research Of The Stock Market Based On JLS Model

The stock market is the main place of bubble accumulation. Leading to the bubble economy and the financial crisis, the important factor is the stock market bubble. Therefore, the stock as well as the stock market bubble in-depth study is crucial. Regulation is effective on the stock market bubble. It is quite necessary to propose and improve the relevant theory.This paper introduces several major crash events first. The seriousness of the consequences of these events caused the domestic and foreign scholars on the study of the crashes phenomenon.Starting from the perspective of information asymmetry, the theoretical model of the stock market crash phenomenon is divided into five models by the domestic and foreign scholars. The JLS model in recent years has been widely used.It has the following form:The estimation of the unknown parameters of the JLS model is a major problem. In this paper, we propose a new parameter estimation algorithm. This algorithm improves the application of the form of LPPL equation in the JLS model. It reduces the function to a function of only three nonlinear param-eters. The transformation significantly decreases the complexity of the fitting procedure and improves its stability tremendously because the modified cost function is now characterized by good smooth properties with in general a single minimum in the case where the model is appropriate to the empirical data. We complement the approach with an additional subordination proce-dure that slaves two of the nonlinear parameters to what can be considered to be the most crucial nonlinear parameter.and the critical time tc defined as the end of the bubble and the most probably time for a crash to occur. This further decreases the complexity of the search. With our proposed methodol-ogy, metaheuristic searches are not longer necessary and one can resort solely to rigorous controlled local search algorithms, leading to dramatic increase in efficiency.Finally, we use the data of Chinese stock market and gold market for empirical studies using this model.Combined with China’s national conditions of the stock market, we give Chinese stock market bubble collapse. Depth study of the formation mechanism of the collapse phenomenon in China is particularly important. The study will promote the development of modern financial theory, and it is an important inspiration to the government financial regulatory.