A Low-Price Equity Screen Using RSI and Seven Consecutive Down Days
Summary
This post proposes selecting stocks with RSI below a stated ceiling, seven consecutive sessions in which the close is no higher than the open, and a share price below a specified level. The article frames the RSI and down-day conditions as technical filters and the low share price as a way to find inexpensive candidates. It also suggests adding company financials, industry context, and other technical indicators, then validating and adjusting the rules through backtesting.
No test results or evidence are presented to show that the screen identifies undervalued stocks or improves returns. A low nominal share price does not by itself establish that a company is cheap, and a run of down sessions may reflect continuing weakness rather than a reversal opportunity. The post acknowledges risks from relying on short-term price patterns and recommends broader research, but its criteria remain a basic screening example rather than a complete trading plan.
Key ideas
- The screen combines RSI below a threshold, seven consecutive down sessions, and a low nominal share price.
- The post recommends adding fundamental and industry filters to avoid relying only on price signals.
- It advises testing and periodically reviewing the parameters, but provides no test evidence.
- A low share price does not establish undervaluation, and consecutive declines can persist.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.