Finding Stocks with Converging Moving Averages and a Rounded Price Trend

Summary

This note outlines a chart-based stock screen using at least five converging moving averages, a rounded or arc-shaped price pattern, and a focus on stocks associated with 2021. It illustrates possible moving-average periods of 5, 10, 20, 50, and 200 days, and treats convergence as a sign that averages are following a similar path. The curved pattern is presented as a longer-term trend shape that may take time to form.

The discussion acknowledges that requiring many averages to converge can leave too few candidates, while judging a rounded shape too early can produce unreliable classifications. It also notes that patterns observed in a particular year may reflect that year’s market environment and should be considered with other information, such as company accounts and industry conditions. The code excerpt is incomplete, and the document provides no formal pattern definition, screening results, or backtest evidence; its criteria therefore require operational definitions before they can be evaluated.

Key ideas

• The proposed screen looks for at least five moving averages converging around a stock’s price trend.
• Example average periods include 5, 10, 20, 50, and 200 days.
• The note describes a rounded price curve as a potentially longer-term trend pattern.
• Strict convergence requirements may produce very few candidates, and short observation windows can misclassify curve shapes.
• The year-specific filter may reflect market conditions, and the note gives no backtest evidence.

Tags

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