RSI, Three-Day Candle Pattern, and Concentration Stock Screen

Summary

This Chinese equity screen combines a 14-period RSI below 65, a three-session candle condition, and a concentration measure below 20%. It also includes a nonnegative trailing earnings filter in its sample formula. The post presents the conditions as a way to identify stocks after a run of weak prices while limiting the selection by a measure intended to reflect trading concentration. It provides indicator formulas and a Python example using rolling volume and price data.

The explanation describes the candle pattern as three consecutive down sessions, but the sample condition compares each prior close as greater than its open, which ordinarily describes bullish candles. The stated concentration calculation also differs between the formula and Python example, so the intended meaning and implementation need clarification before use. The author notes that the concentration measure may be crude and suggests more detailed calculations and financial factors. No backtest, evidence of predictive value, or trading results are supplied.

Key ideas

• The screen combines RSI below 65 with a three-session candle condition and concentration below 20%.
• A sample formula adds a nonnegative trailing earnings requirement.
• The written description calls for three down sessions, while the sample candle comparisons appear to select up sessions.
• The concentration calculation is not consistent across the examples and needs precise definition.
• The post provides no backtest or evidence that the screen predicts returns.

Tags

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