MACD and Moving-Average Filters for Stock Selection

Summary

This stock-screening method combines positive MACD readings with an upward arrangement of short-term moving averages. The document describes MACD as a way to identify positive price momentum and compares five-day and ten-day averages as a simple trend filter. It also gives a ranking suggestion based on average return on equity and includes example screening references, but it does not provide a backtest or performance evidence.

The author cautions that the rules are simple, can produce false signals, and do not specify trade entry or exit timing. The screen also omits company fundamentals unless they are added separately. It is best understood as an initial technical filter that would require further evaluation, explicit trade rules, and risk controls before use.

Key ideas

• The screen looks for positive MACD and a rising short-term moving-average relationship.
• It compares five-day and ten-day moving averages as a trend filter.
• The document suggests ranking candidates by average return on equity.
• The method gives no entry or exit timing and may produce false signals.
• Fundamental analysis and risk controls are suggested as additional considerations.

Tags

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