RSI, Order-Book Volume, and Moving Average Stock Screen

Summary

This note describes an equity selection rule using three conditions: a 14-period RSI below 65, bid-side volume greater than ask-side volume, and the 20-day moving average above the 120-day moving average. The RSI threshold is presented as a way to avoid an overbought state, the volume comparison as a sign of optimistic demand, and the moving-average relationship as evidence of a longer-term upward trend. The intended use is short-term stock selection.

The article includes indicator and Python examples, but provides no backtest, return data, or evidence that the combined filter predicts profitable trades. It warns that technical signals alone omit company fundamentals and financial data, and that historical prices cannot capture all influences on future prices. The long and short moving-average comparison may also respond slowly to near-term moves. It recommends considering industry and fundamental information alongside the signals and applying risk controls; the code example contains an additional market-value condition not included in the stated core rule.

Key ideas

• The selection rule requires RSI below 65, bid volume above ask volume, and the 20-day average above the 120-day average.
• The RSI filter is meant to avoid stocks considered overbought by this measure.
• The volume and moving-average conditions represent demand pressure and a longer-term price trend.
• The article gives code examples but no performance evidence.
• Fundamental information and risk controls are suggested because technical indicators alone are incomplete.

Tags

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