Screening Chinese Stocks for Moving Average Confluence, Low Price, and Dividends

Summary

This article outlines a Chinese equity screening rule that combines three conditions: at least five moving averages converge, the share price is below 12 yuan, and the company’s 2019 dividend payout ratio exceeds 25%. The convergence is presented as a sign of relative price stability, while the price and dividend filters aim to select lower-priced stocks with a record of returning cash to shareholders. The article includes illustrative selection logic using moving average periods of 5, 10, 20, 60, and 120 days.

It identifies several limitations: the screen may return few stocks, market conditions can disrupt apparent stability, and past dividend capacity may not persist. Suggested refinements include adding valuation measures such as price-to-earnings or price-to-book ratios and reassessing the screen over time. No backtest, return series, or evidence that the criteria predict performance is provided. The code example is schematic and does not define precisely how moving-average confluence is measured, so the rule would need operational clarification before implementation.

Key ideas

• The screen selects stocks with at least five converging moving averages.
• It also requires a share price below 12 yuan and a 2019 dividend payout ratio above 25%.
• The example moving-average periods are 5, 10, 20, 60, and 120 days.
• The article warns that the screen may produce few candidates and that market trends or future dividend changes can undermine its rationale.
• Valuation factors and periodic review are suggested as possible refinements, but no performance evidence is shown.

Tags

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