A Mean-Reversion Stock Screen Using Volatility, Rising Moving Averages, and Three Down Days

Summary

This proposed stock screen looks for daily amplitude above 1, upward divergence in moving averages, and three consecutive down sessions. Its rationale is that a short pullback near a longer-term moving-average support level, alongside an improving short-term average signal, may identify shares poised to rebound. The post supplies formula and Python examples, but no backtest, trade construction, entry or exit rules, or performance evidence.

The author frames the setup as a short-term dip-buying idea and notes that its indicators are sensitive to market cycles. A three-day decline can continue during strong downtrends or panic, so the apparent reversal signal may fail or lag. Longer-term trend filters and fundamental analysis are suggested as possible safeguards. The implementation examples contain ambiguities: the amplitude threshold is not clearly expressed in consistent units, and the code's moving-average and low-price comparisons do not transparently match all parts of the written rationale.

Key ideas

• The proposed screen combines amplitude above 1, upward-moving-average divergence, and three consecutive down days.
• The setup interprets a pullback near support as a possible short-term reversal opportunity.
• The post warns that short-term signals can fail during strong trends or market panic.
• Longer-term indicators and fundamental checks are suggested as potential additions.
• The examples have implementation ambiguities and no reported performance results.

Tags

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