Equity Screening with RSI, Bid-Ask Volume Imbalance, and a Price Cap

Summary

This stock selection rule combines three conditions: RSI below 65, displayed buy-side volume greater than sell-side volume, and a share price below 12. The article frames RSI as a measure of price conditions, the volume comparison as a sentiment signal, and the price ceiling as a way to focus on lower-priced stocks. It also suggests adding company fundamentals, financial measures, and competitive position to make the screen more comprehensive.

The post supplies indicator formulas and sample implementation references, but no backtest, benchmark, or evidence of profitability. The rationale for a low share price as a measure of undervaluation is not established: nominal share price alone does not indicate whether a stock is cheap relative to earnings, assets, or cash flows. Bid and ask quantities can also change rapidly and do not by themselves establish durable buying pressure. The screen therefore describes a candidate filter, not a tested trading strategy.

Key ideas

• The proposed screen requires RSI below 65, buy-side displayed volume above sell-side volume, and price below 12.
• The author presents RSI as a price-condition measure and volume imbalance as a sentiment cue.
• The article advises adding fundamental and competitive analysis to the selection process.
• It provides no evidence that the filter predicts returns, and low nominal price alone does not establish undervaluation.

Tags

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