The five rules
The score is the sum of five yes/no tests. Each one that passes adds a point.
The tests
| # | Rule | What it tells you |
|---|---|---|
| 1 | The long moving average is rising | The big-picture trend is up |
| 2 | The short moving average is rising | The recent trend agrees |
| 3 | Price is above its long moving average | Adds conviction to the big-picture trend |
| 4 | Price is above its short moving average | Momentum is building here and now |
| 5 | The most recent extreme touched was the high, not the low | The security has made new highs more recently than new lows |
Rules 1 and 2 ask whether the averages themselves are rising. Rules 3 and 4 ask whether price is above them. Those are different questions: a price can spike above a moving average that is still falling, and that combination scores differently from a trend where both agree.
Rule 5, the one people ask about
Within a rolling window, did the price more recently touch the top of its range or the bottom? Touching the high more recently is trend-confirming.
It’s a deliberately simple way of asking “which way did this last stretch?” without smoothing the answer away, and it is the rule that most often separates a 4 from a 5.
Reading a change, not just a level
A score is more useful in motion than at rest. A move from 2 to 4 says a trend is forming; a slip from 5 to 3 says an established trend is being questioned.
The asset tables show the day’s score change beside each score for exactly this reason, and count consecutive weeks at 5 or at 0 (the W=5 and W=0 columns) so you can tell a trend that has held for a year from one that arrived on Tuesday. The small sparkline in the same row is a year of weekly CAPR — the shape of the performance behind the score, not the score itself.
Order doesn’t affect the score
The rules are presented in a fixed order for readability, but the score is a count of five booleans — how they are numbered makes no difference to the result.