Combining Range, RSI, MACD, Turnover, and Valuation in a Stock Screen

Summary

The document describes a technical stock screen using a range threshold above 1, RSI below 65, and MACD above its zero line. It interprets the range as a sign of greater price movement, the RSI ceiling as avoiding an extremely overbought reading, and positive MACD as a favorable short-term trend. Later versions add positive valuation checks, a price-to-earnings ceiling below 30, and turnover within a stated band of 3% to 12%. Indicator formulas and pseudocode are included, but no backtest results or evidence of predictive performance are reported.

The article notes that technical filters alone omit company and industry quality, and that frequent reliance on signals can increase turnover, costs, and risk. It recommends adding fundamental context, other indicators, and stop-loss or profit-taking rules. The different screen versions are not fully reconciled, and one passage discusses turnover as an added filter while earlier logic does not include it. Treat the conditions as an illustrative selection recipe requiring independent testing, rather than evidence that selected shares have higher returns.

Key ideas

• The basic screen combines range above 1, RSI below 65, and MACD above zero.
• Later variants add positive valuation checks and turnover between 3% and 12%.
• The article presents formulas for range, RSI, and MACD but supplies no performance results.
• Technical-only filtering can miss fundamental and industry risks and may encourage costly overtrading.
• The differing versions should be reconciled and tested before practical use.

Tags

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