A Stock Screen Combining Rising Lows, High Amplitude, and Reversal Patterns

Summary

The document outlines an equity selection rule combining amplitude above one, a rising bottom pattern, and a reversal or engulfing-style signal. It describes the first two conditions as ways to characterize price movement and the reversal condition as a measure of buying and selling pressure. Example formula and Python snippets attempt to express the screen, including a bottom comparison and Bollinger-band-based conditions. These examples are presented as references and are not accompanied by tested results or a precise validation of the indicator definitions.

The author warns that the method depends on short-term price action and market mood, so rapid changes can cause it to miss the broader trend. Pauses and resumptions may also distort the reversal signal. Suggested refinements include volume and moving-average filters, screening for pause-related distortions, and setting profit-taking and stop-loss rules. The final recommendation adds further technical checks, but no specific thresholds, backtest, or evidence of profitability are supplied.

Key ideas

• The screen combines amplitude above one, rising bottoms, and a reversal pattern.
• The document provides example formulas and partial Python logic for these conditions.
• It warns that short-term signals can fail when market direction changes quickly.
• Trading pauses and resumptions may distort the reversal condition.
• Volume, moving averages, and explicit exit rules are suggested as possible refinements.

Tags

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