Screening for a Rebound After Seven Down Sessions

Summary

This Chinese stock-selection note proposes finding short-term rebound candidates by combining daily amplitude above 1, an upward divergence in moving averages, and seven consecutive down sessions. It interprets amplitude as a measure of price movement, the moving-average condition as evidence of a short-term upswing, and the losing streak as a possible sign that selling pressure is near exhaustion. The intended setup mixes weakness with signs of improving trend.

The note warns that the screen can select stocks still in a sustained decline or caught in a broadly falling market, increasing losses. It suggests adding indicators such as MACD or RSI, valuation measures such as price-to-earnings or price-to-book ratios, or an industry filter. The document provides formula and Python examples, but their definitions appear inconsistent with the stated conditions, and it gives no backtest results or evidence that the screen predicts rebounds.

Key ideas

• The screen combines amplitude above 1, upward-diverging moving averages, and seven consecutive down sessions.
• The proposed rationale is to find heavily sold stocks whose short-term trend may be improving.
• The author cautions that a losing streak can persist, especially in a broad market decline.
• Additional technical, valuation, or industry filters are suggested, but no performance evidence is provided.

Tags

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