Fundamental Score: Any stock above 80 on our scoring system receives a 1. The fundamental scoring system rates stocks based on 7 criteria. The score is out of 100.
Trend: The Trend of the stock must be going up. This means that the 20 Slow Moving Average (SMA) and the 50 SMA must both be going up while the 20 SMA is stacked on top of the 50 SMA. We could do a pivot based Elliott Wave; however, this is unnecessary given that we are creating a basic screening system that ranks the stocks. If the above Criteria is met, the stock receives a 1.
Sector: Much of our education is based on the Top Down approach. This approach focuses on analyzing the broad markets, sector, and stock. Furthermore, the sector is responsible for up to 50% of the stock movement and is another reason we should include the sector. If the above criteria is met, the stock would receive a 1.
MACD: Keep it simple. In our front and back end presentations we discuss the importance of using MACD and Stochastics. Although they are not the preferred method of many of our trainers, these indicators are easy to understand and extremely helpful to beginner students. The system would analyze two areas. If either of the two methods were met, the stock receives a 1.
Hook: "Look for the hook" refers to the reversal of the MACD cross. It shows momentum and reversals. The hook, when combined with other indicators, makes a powerful tool.
Upward movement and Separation: We would look for stocks with increasing momentum in the upward movement.
Stochastics: If the Stochastics is hooking above the 20 band and moving up, the stock receives a 1 and is consistent with the front and back end presentations.
Refer to the AKS stock example below.
AKS would be a 5-star rated stock. All parameters of the scoring system are granted a 1.