A Stock Screen Combining Positive MACD, Positive P/E, and RSI Below 65

Summary

This document proposes a stock-selection screen that requires MACD to be above zero, price-to-earnings ratio to be positive, and RSI to be below 65. Its rationale is to select stocks with a positive momentum signal, a positive valuation measure, and less evidence of short-term overbought conditions. It also suggests sorting qualifying stocks by average return on equity, although the screen is described as requiring further review of fundamentals and the broader environment.

The article provides indicator formulas and reference implementations for filtering and ranking stocks. It warns that MACD alone overlooks other technical evidence, a positive P/E does not establish financial health, and RSI can lag and produce selection errors. It recommends adding fundamental measures such as margins and profits and combining technical indicators to inform timing. No backtest, comparison group, transaction-cost treatment, or performance evidence is supplied, so the criteria should be read as a screening idea rather than a validated strategy.

Key ideas

• The screen selects stocks with MACD above zero, positive P/E, and RSI below 65.
• The rationale combines a positive trend signal, a positive valuation ratio, and a filter against stronger short-term overbought readings.
• The article suggests ranking eligible stocks by mean ROE.
• The author cautions that the three indicators omit important technical and fundamental information.
• No empirical performance results are presented, and RSI lag may contribute to selection errors.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.