Screening for Converged Moving Averages and Positive Annual Returns
Summary
The document proposes a technical stock screen based on shares with at least five moving averages converging, naming the five-, ten-, twenty-, fifty-, and two-hundred-day averages. It also asks that the stock have a positive return over the previous year. This combination is presented as a way to identify possible opportunities where price measures cluster, while the annual return condition favors stocks with recent positive performance.
The article gives no backtest, performance figures, or operational definition for how close the averages must be to count as converged. It also provides example code that is syntactically unreliable and does not implement the stated multi-average screen clearly. The text mentions Bollinger Bands and company financial measures as possible additions, but does not specify a complete, testable rule for them. It notes that the approach is purely technical as described, may respond poorly to short-term fluctuations, can exclude stocks whose longer-term prospects are improving, and omits fundamentals. The proposed screen therefore needs precise definitions and empirical evaluation before use.
Key ideas
- The proposed screen looks for convergence among five named moving averages.
- It also requires a positive return over the preceding year.
- The document does not define a numerical tolerance for moving-average convergence.
- Bollinger Bands and company financial measures are suggested as possible additions.
- No performance evidence is supplied, and the sample code does not clearly implement the full screen.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.