FactorSage

Technical Signals · Lesson 2.6

Trend filters with valuation

Valuation tells you whether a stock is cheap. A trend filter tells you whether the market has noticed yet. Together they tend to reject the worst value traps without sacrificing too many real opportunities.

The combined pattern

Build a buy signal that requires both conditions in an ALL group:

  • MARGIN_OF_SAFETY IS_AT_OR_ABOVE 0.20
  • PRICE IS_ABOVE DAILY_SMA_200

What you give up

Adding a trend filter delays entries. You will not catch the absolute bottom. In return you avoid a meaningful slice of the cheap-and-still-falling cases that pure value screens hit.

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