A Chinese Stock Screen Using Range, Reversal, and Prior-Low Conditions

Summary

The document describes a daily stock screen based on three conditions: a high-to-low range greater than one percent, a reversal or engulfing-style pattern, and a close above the previous day’s low. It presents these conditions as a way to find stocks whose price action may be stabilizing and turning upward. It also offers example implementations in indicator formula and Python-like pseudocode, including sorting selected stocks by a heat ranking.

The article warns that a price-action screen omits company fundamentals and may select unstable or highly valued firms; it suggests incorporating financial measures and broader market risk. The implementation descriptions are not fully consistent: the stated reversal condition and the named candlestick function may not represent the same pattern, while the text also refers to other indicators without integrating them into the screen. No backtest results or evidence of predictive performance are supplied, so the screen should be treated as a candidate rule set rather than a validated strategy.

Key ideas

• The screen combines a daily range above one percent, a reversal pattern, and a close above the prior low.
• The document describes the pattern as a possible sign of price stabilization and upward movement.
• It provides example screening logic and suggests ranking selected stocks by heat.
• The author identifies missing fundamental analysis and market risk as limitations.
• The pattern definitions are inconsistent across the prose and code examples, and no backtest evidence is given.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.