Combining MACD, Rising Moving Averages, Trading Flow, and Fundamentals
Summary
The document presents a stock-screening idea that combines MACD above its zero line, upward-diverging daily moving averages, and an external-to-internal trading volume ratio above a stated threshold. It then extends the screen with fundamental filters: stable net profit growth over the prior year and a price-to-earnings ratio below the industry average. The article includes indicator formulas and sample Python snippets for calculating and applying parts of the screen.
It characterizes MACD and moving averages as trend measures and the trading-flow ratio as a buy-sell activity measure. The article cautions that a narrow set of technical and flow inputs may overfit, omit company fundamentals, and reflect market sentiment. It recommends adding fundamental measures, using multiple indicators, and comparing trading-flow data against broader market conditions. It provides no backtest results or evidence that the combined screen is profitable; implementation details and data-field consistency also require validation.
Key ideas
- The initial screen selects stocks with MACD above zero, rising and diverging moving averages, and a high external-to-internal volume ratio.
- The proposed expanded screen adds net-profit growth and a below-industry-average valuation filter.
- The article warns that narrow technical and trading-flow criteria may overfit and omit important company information.
- It recommends combining indicators and comparing trading-flow measures with broader market conditions.
- No performance results are provided to establish whether the screen is effective.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.