TRIX momentum and fundamental overlays for medium-term stock selection

Three gates for medium-term selection

Editorial reading: medium-term stock selection can be taught as a three-gate procedure rather than as a single indicator. The first gate is a TRIX timing model. The second gate applies rule-based entry filters to first-week momentum and to where TRIX sits relative to its signal line. The third gate is a fundamental overlay that keeps only financially healthy names.

The archive facts below describe a historical workflow. They do not prescribe a live portfolio.

TRIX timing events

The historical workflow defined buy and sell timing with TRIX and signal-line events labeled bounce, golden cross, fall, and dead cross. Entries were distributed across paired B1 and B2 points. Exits were distributed across paired S1 and S2 points.

Weekly Nasdaq Composite observations were used to test how first-week rise, TRIX level, and TRIX-versus-signal location related to subsequent return after a buy signal.

Rate of return was measured as the change from the buy-week close to the highest close before or at the sell signal. The measure did not adjust for holding time or interest.

Rule-based entry filters

First-week rise observations were grouped by size. Negative first-week rises were dropped because they were judged unlikely to produce a winning trade. After grouping, higher first-week rise corresponded to higher average return, so the workflow preferred names that already showed a stronger weekly rise when the buy signal appeared.

When the same buy signals were grouped by TRIX value, lower TRIX at entry corresponded to higher average return. The archive interpreted that pattern as more room after a corrective drop.

A location measure compared TRIX to its signal line. Grouped averages favored a bounce with TRIX already above the signal, then a bounce from below, over less favorable TRIX versus signal geometries.

A fundamental overlay

A fourth screen required assets above liabilities and an upward trend in revenues and earnings per share. The aim was to avoid pairing a technically healthy setup with a deteriorating balance sheet.