How a Composite Technical Signal Score Works

By Rohan Fernandes, Founder · Updated 2026-08-22 · Educational reference, not investment advice

What does each indicator family contribute?

The families answer different questions, which is the point of blending them:

• Momentum oscillators (RSI) locate price relative to its own recent gains and losses: stretched, neutral, or washed out.
• Trend-following momentum (MACD) reads whether the medium-term trend is accelerating or rolling over, via the gap between two moving averages and its own smoothed history.
• Volatility bands (Bollinger Bands) locate price relative to its recent statistical range, catching stretched moves and, through band width, compression that precedes expansion.
• Trend strength (ADX) measures whether a directional trend exists at all, without caring which direction; it separates trending tape from chop, which changes what every other indicator means.
• Moving-average structure encodes the position and order of the averages: price above a rising shorter average above a rising longer one is the classic definition of an established uptrend.

Why bound each vote and the total?

Unbounded indicator readings let one screaming input dominate the blend; bounding each vote and summing to a capped composite forces the score to mean how many independent kinds of evidence agree, not how loud the loudest input is. A +4 on a -5 to +5 scale reads directly: four families of evidence lean bullish. The bounded design also makes scores comparable across stocks and across time, which is what lets a scanner rank a universe by them, the way Options Scanner's signal scan does.

What does a composite deliberately not know?

Everything outside price and volume: valuation, news, event dates, and volatility pricing. That is why a signal score is the first screen in a disciplined pipeline rather than the decision: the composite picks the direction of interest, and separate volatility, liquidity, and event gates decide whether any structure is worth building there. A strong signal into overpriced options, or through an earnings date, fails the later screens the composite cannot see.