Equity Screening with RSI, Three Down Sessions, and Rising Moving Averages

Summary

This stock-selection rule combines a 14-period RSI below 65 with three consecutive declining sessions and a condition intended to identify upward divergence between short- and longer-term moving averages. The post presents the rule as a way to screen for stocks with relatively restrained RSI readings, recent price weakness, and improving average-price structure. It includes example implementations in two trading environments, but the core idea is the conjunction of these three technical filters rather than a fully specified portfolio strategy.

The author cautions that the screen relies heavily on short-term price behavior and that unusual observations can distort the moving-average condition. Suggested refinements include adding company financial data or industry relationships and combining the moving-average test with other indicators. The document gives no backtest, return series, benchmark comparison, or detailed execution and portfolio rules. Also, the phrase describing three down sessions does not align cleanly with the example conditions, which test prior sessions for closes above opens; this ambiguity should be resolved before implementation.

Key ideas

• The screen requires RSI below 65, three prior sessions meeting its candle condition, and a moving-average divergence condition.
• The moving-average test compares a short average with lagged values of a longer average.
• The source warns that short-term price dependence and outliers may cause misleading selections.
• Fundamental or industry information is suggested as an additional screening input.
• No performance test or complete portfolio construction method is supplied, and the candle condition is ambiguous.

Tags

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