Equity Screening with MACD and Moving Average Confirmation

Summary

The document presents a draft daily stock strategy that screens for companies with price-to-earnings ratios in a specified range and high return on equity, then looks for MACD crossovers to time entries and exits. It also proposes limiting holdings to five stocks and allocating an equal fraction of the portfolio to each new position. A short-term average is intended to confirm the entry signal against a longer-term average.

The example provides no backtest, performance figures, or discussion of transaction costs and risk controls. It also contains implementation inconsistencies: the confirmation compares MA2 with MA5 even though the code calculates MA30, and indentation and variable definitions appear faulty. The MACD exit rule treats a move below zero as a sell signal. These issues mean the snippet is best read as an incomplete strategy sketch rather than a ready-to-run or validated system.

Key ideas

• The draft combines a valuation and profitability screen with a MACD entry signal.
• It proposes using a short-term average above a longer-term average as confirmation.
• The strategy limits the portfolio to five holdings and allocates an equal share to each entry.
• It exits positions when MACD turns negative after previously being positive.
• The code has undefined or mismatched variables and provides no performance evidence.

Tags

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