Stock Selection with Moving-Average Confluence, Upward Dispersion, and Dividends

Summary

This proposed equity screen combines three conditions: at least five moving averages overlap, the averages spread upward on the current day, and the company’s 2019 dividend payout ratio exceeds 25%. The article interprets the overlapping averages as agreement across time horizons, upward dispersion as a rising short-term trend, and the payout condition as evidence of shareholder distributions. It presents these as possible indicators of stability and upside, without defining the averaging periods or the precise meaning of dispersion.

The author cautions that emphasis on technical patterns and a historical payout ratio may leave out important fundamentals, and that market changes can undermine the screen. Suggested refinements include assessing profitability, market share, and financial condition, as well as adding indicators such as MACD or RSI. The article provides no backtest, performance data, or evidence that these filters forecast returns; its claim of long-term potential should therefore be treated as a hypothesis.

Key ideas

• The screen requires at least five overlapping moving averages and upward dispersion on the current day.
• It adds a historical dividend payout ratio above 25% for 2019.
• The article proposes the combined conditions as signs of trend agreement and shareholder distributions.
• It warns that technical signals and a historical payout ratio may miss changes in company fundamentals.
• Profitability, market share, financial condition, and other technical indicators are proposed as possible additions.

Tags

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