Screening for High ROE Stocks with a Morning Star Pattern

Summary

This post proposes screening equities for a daily price range of at least one unit, strong return on equity across five years, and a three-candle morning star pattern. The described pattern consists of an advancing candle, a small indecisive or lower candle, and a strong advancing candle, interpreted as a possible change in market sentiment. The post frames ROE as a measure of operating strength and price range as an indication of volatility.

It includes sample formula and Python-style logic, along with general suggestions to consider other financial and market factors and adjust thresholds by industry. The examples are illustrative; the post provides no backtest, performance figures, or evidence that the pattern predicts returns. Its code-like screening expression also does not clearly enforce the stated five-year ROE condition in every part, and the text acknowledges that technical patterns are subjective, the screen is narrow, and the signals may not suit every industry or market.

Key ideas

• The proposed screen combines a minimum daily price range, high ROE, and a morning star pattern.
• The morning star is treated as a possible shift in market sentiment, not a guaranteed forecast.
• The post recommends combining technical signals with broader financial measures and market-specific thresholds.
• No performance evidence is supplied, and the example logic is not a validated strategy.

Tags

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