Combining Price Amplitude, MACD, and Five-Year ROE for Stock Selection

Summary

This stock screen combines a price-movement condition, a technical signal, and a profitability history. It selects stocks with amplitude above 1, MACD above its zero line, and return on equity above 15% in each of five years. The document interprets these filters as seeking volatile stocks with a favorable MACD signal and sustained profitability.

It cautions that strong profitability and a technical signal do not establish that a stock is fairly valued. It recommends adding valuation analysis and considering the company’s industry, characteristics, and business model, as well as other financial measures. The document provides indicator formula references and a Python example, but no backtest or performance evidence. The code examples rely on indicator functions and data fields whose definitions and implementation are not fully explained, so the stated screen would need careful validation before use.

Key ideas

• The screen requires amplitude above 1 and MACD above zero.
• It also requires return on equity above 15% for each of five years.
• The document associates the filters with volatility, a technical buy signal, and sustained profitability.
• It warns that the screen can select overvalued stocks and recommends adding valuation and company-specific analysis.
• 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.