What is SROC? The signal behind Numu's stock picks, explained simply

If you open Numu and look at the details of any strategy, you will see parameters like SROC(60,30) or SROC(120,60). This is the indicator the app uses to rank stocks.

SROC stands for Smoothed Rate of Change — it is a small tweak to a much more familiar indicator. Let us build up what it is from the ground up.

Start with ROC — Rate of Change

Rate of Change is one of the oldest momentum indicators in technical analysis. It asks a simple question:

What is the stock's return over the past N days?

If ROC(60) for a stock is 15%, that means the stock is up 15% over the past 60 trading days (roughly 3 months).

This is useful, but it has a problem: daily prices are noisy. A stock that gapped up 20% on a single day 60 days ago would have an ROC(60) of 20% today, and then suddenly drop to 0% tomorrow when that day falls out of the window. The ranking bounces around for reasons that have nothing to do with the stock's actual trend.

Smoothing the noise out

The fix is obvious once you see it: smooth the price series first, then take the rate of change.

That is what SROC does. Given two parameters (N, S):

Compute an S-day moving average of the stock's price (smoothing)
Compute the rate of change over the last N days of that smoothed series

So SROC(60, 30) means: "Take the 30-day moving average of the stock's price, then measure how much that moving average has changed over the last 60 days."

The result is a momentum signal that:

Still captures the medium-term trend (the N parameter)
Ignores single-day spikes and gaps (the S parameter smooths them out)
Changes smoothly from day to day, so rankings are more stable

Why two flavors: (60,30) vs (120,60)?

Numu uses two different SROC configurations depending on the strategy:

Strategy	SROC parameters	Character
Balanced	SROC(60, 30)	Faster signal, more turnover
Aggressive	SROC(60, 30)	Same fast signal, concentrated
Steady	SROC(120, 60)	Slower signal, lower turnover
Focused	SROC(120, 60)	Slower signal, concentrated

SROC(60, 30) — 3-month momentum on a 1.5-month smoothed price — reacts quickly to regime changes but trades more often. Good when markets are trending cleanly.

SROC(120, 60) — 6-month momentum on a 3-month smoothed price — trades less often and is more forgiving to short-term pullbacks. Better when markets are choppy.

Both beat the S&P 500 in our backtest. Neither is universally better — they behave differently at different market regimes, which is why Numu offers both.

The filter: threshold > 10

In addition to ranking by SROC, Numu applies a threshold filter: only stocks with SROC values above 10 are eligible to be picked. If not enough stocks clear this threshold in a given month, the strategy goes partially or fully to cash for that period.

This is deliberate. There are months where no stock in the universe has strong positive momentum — typically during bear markets or early recoveries. In those months, the correct answer is usually "do not buy anything," not "buy the least-bad option."

The threshold is how Numu says "if nothing looks good, we sit out."

The minimum history filter

One recent improvement: stocks need at least 252 trading days (~1 year) of price history before they are eligible for ranking. This filter exists because newly-IPO'd stocks often have spike-like chart patterns that fool momentum ranking.

Example: A stock IPOs in February at $20, runs to $55 by May. Its 3-month return looks like 175%. It would top every momentum ranking — but that 175% is not momentum in any meaningful sense. It is just an IPO spike, and will almost certainly mean-revert.

The 252-day filter excludes these from the ranking. It is unglamorous but meaningfully improves the robustness of the strategy.

Does SROC actually work?

Across Numu's 2020–2026 backtest on the SPUS universe, SROC-based ranking produced:

3 to 8 percentage points of excess CAGR vs. the SPUS benchmark
Sharpe ratios between 0.96 and 1.23 across strategies
A 65% win rate on monthly rebalance periods

These are consistent with the momentum literature. SROC is not a magic indicator — it is a robust implementation of a well-documented effect.

The takeaway

You do not need to understand SROC to use Numu. The app does all the math and shows you the output. But if you are the kind of investor who wants to know what is actually under the hood, SROC is:

A smoothed version of Rate of Change
Two parameters: a lookback window and a smoothing window
Robust to price noise, IPO spikes, and single-day gaps
One of many ways to implement momentum, but a particularly clean one

The indicator itself is old. The implementation — combining it with a Shariah screen, a threshold filter, and a minimum history filter — is what makes Numu's approach specific.