MACD and Five-Year ROE Screening with Stock Heat Ranking

Summary

This document outlines an annual stock selection approach that combines a positive MACD signal with high stock heat and a record of strong profitability. It proposes screening after annual reports are published, requiring return on equity above 15% in each of the preceding five years, then ranking eligible stocks by heat. The stated rationale is to combine price trend, popularity, and business performance.

The article gives formula references for MACD, a heat measure based on price and volume changes, and the five-year ROE filter, plus a Python example sketch. It does not provide performance results or a complete, validated implementation; it notes that some platform-specific indicators need separate implementation. The suggested limits include macroeconomic and industry changes, sentiment effects, an overly narrow candidate pool, and concentration risk. It proposes adding valuation measures, updating the screen on a rolling basis, and applying risk controls such as stop losses.

Key ideas

• The screen requires MACD to be above zero and ranks qualifying stocks by a heat measure.
• It also requires return on equity above 15% in each of five consecutive years.
• The selection is intended to run after annual reports become available.
• The article warns that strict filters can leave too few stocks for diversification.
• It offers no backtest evidence and leaves some indicator implementation details unspecified.

Tags

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