The Strategy Explained

About the Triple Point Strategy

Triple Point combines three time-tested methodologies into a unified trading system. When Nobel Prize-winning valuation analysis aligns with fundamental quality metrics and technical chart patterns, you get signals with significantly higher probability of success.

The Core Concept

Most trading systems rely on a single methodology—either fundamental analysis OR technical analysis. This creates blind spots. A stock might look cheap on fundamentals but have terrible price momentum. Or it might have great technicals but be fundamentally overvalued.

Triple Point solves this problem by requiring confirmation from three independent analysis methods before generating a signal. This dramatically reduces false signals and increases the probability of profitable trades.

3
Independent methodologies
40+ Years
Academic research foundation
18
P&F patterns detected

The Three Pillars

Each methodology has proven itself independently over decades. Together, they create a powerful confluence of signals that institutional traders have used for generations.

Weight: 40%

CAPE Ratio Analysis

Nobel Prize-Winning Valuation

Academic Foundation
Shiller (2000)

The Cyclically Adjusted Price-to-Earnings ratio, developed by Nobel laureate Robert Shiller, compares current stock prices to average inflation-adjusted earnings over the past 10 years.

Key Components

  • Eliminates short-term earnings volatility
  • Proven predictor of long-term market returns
  • Used by institutions managing $100B+ in assets
  • Historical average CAPE for S&P 500: ~16-17

How It Works

When CAPE is significantly below historical averages, stocks are typically undervalued and poised for above-average returns. When CAPE is elevated, expected returns tend to be lower.

Weight: 35%

Piotroski F-Score

9-Point Fundamental Analysis

Academic Foundation
Piotroski (2000)

Developed by Stanford professor Joseph Piotroski, the F-Score is a discrete score from 0-9 that identifies financially healthy value stocks using nine fundamental criteria.

Key Components

  • Profitability: ROA, Operating Cash Flow, Change in ROA
  • Leverage: Change in Long-term Debt, Change in Current Ratio
  • Operating Efficiency: Change in Gross Margin, Change in Asset Turnover

How It Works

Each criterion scores 1 (pass) or 0 (fail). A total score of 8-9 indicates exceptional financial health. Scores below 3 indicate potential financial distress.

Weight: 25%

Point & Figure Charting

150 Years of Technical Wisdom

Academic Foundation
Dorsey (1995)

Point & Figure charts, dating back to the 1880s, filter out time and focus purely on price movements, revealing supply and demand dynamics through classic patterns.

Key Components

  • Removes noise by filtering out minor price movements
  • Identifies clear support and resistance levels
  • Recognizes 18 classic chart patterns including breakouts and catapults
  • Provides buy/sell signals with calculated price targets

How It Works

Unlike traditional charts, P&F only records significant price changes. X columns represent rising prices, O columns represent falling prices. Breakouts above resistance or below support generate signals.

Enhanced Strategy v2.0

Momentum Filter + Regime Detection

Our research revealed a critical insight: the original signals are contrarian—they buy when prices fall. We've added momentum confirmation to avoid catching falling knives.

The Problem We Solved

CAPE and F-Score are value signals—when prices fall, P/E ratios drop, and these indicators say "buy the dip." In a sustained bear market, this means buying stocks that keep falling.

Before (2022 Bear Market)
-28.2%
Strategy generated 257 long signals, 0 shorts
After Enhancement
-6.3%
Regime filter blocked longs, preserved capital

Layer 1: Market Regime

SPY vs 200-day Moving Average

BULLLongs only • 100% size
CAUTIONLongs only • 50% size
RECOVERYLongs allowed • 70% size
BEARCash or shorts only

Layer 2: Momentum Filter

Trend + Momentum Confirmation

For LONG signals:
  • Stock price > 50-day SMA
  • 3-month momentum > 0
For SHORT signals:
  • Stock price < 50-day SMA
  • 3-month momentum < 0

Enhanced Strategy Results (2009-2025)

24.5%
CAGR
was 9.3%
0.99
Sharpe Ratio
was 0.38
31.5%
Max Drawdown
was 34%
57%
Win Rate
was 50.5%

How Signals Are Generated

1

CAPE Analysis

Determines if the stock is undervalued or overvalued relative to historical earnings

2

F-Score Check

Confirms the company has strong fundamentals and isn't a "value trap"

3

P&F Confirmation

Validates price action with chart pattern recognition

Signal Types

BUY Signal

Generated when CAPE indicates undervaluation, F-Score ≥ 7, and P&F shows bullish breakout pattern

SELL Signal

Generated when CAPE indicates overvaluation, F-Score ≤ 3, and P&F shows bearish breakdown pattern

Backtested Performance

The Triple Point strategy has been backtested using historical market data across multiple market cycles. The following results are hypothetical simulations showing how the strategy would have performed—not actual trading results.

24.5%
Average Annual Return
vs S&P 500: 12.2%
57%
Win Rate
vs S&P 500: ~50%
0.99
Sharpe Ratio
vs S&P 500: 0.62
-31.5%
Max Drawdown
vs S&P 500: -34%

Important Disclaimer: The performance figures shown above are based on hypothetical backtesting using historical data. They do NOT represent actual trading results. Past performance does not guarantee future results. Backtested results have inherent limitations: they are designed with the benefit of hindsight, do not reflect actual slippage or execution costs, and cannot account for the impact of economic and market factors on decision-making. Actual results may differ materially.

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