Combining MACD, Three Down Days, and Profitability in a Small-Cap Stock Screen

Summary

This post proposes screening Chinese equities for market capitalization below 10 billion yuan, positive net income, MACD above its zero line, and three consecutive down days. It frames the combination as a way to pair a pullback pattern with a positive broader momentum signal while excluding loss-making firms. The discussion also suggests checking financial-statement reliability and considering additional technical and fundamental measures.

The supplied code does not clearly implement the full stated screen. Its MACD histogram conditions check a recent sequence of values around zero rather than explicitly detecting three declining sessions, and the financial-data filters do not establish the claimed three-year record as clearly as the prose suggests. The post identifies risks from a narrow selection universe, unreliable financial data, and lagging indicators. It gives no backtest results or evidence that the proposed rules deliver long-term value, so the strategy remains an unvalidated screening idea.

Key ideas

• The proposed screen combines a market-cap ceiling, positive earnings, MACD above zero, and a three-day price decline.
• The author presents the down-day pattern as a pullback condition within a positive MACD regime.
• The code's MACD checks do not directly verify three consecutive down days, leaving a mismatch with the stated rule.
• The post flags narrow coverage, financial-data reliability, and indicator lag as risks.
• No performance results are provided to validate the strategy.

Tags

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