Screening for Moving-Average Alignment and Short-Term Uptrends

Summary

This note presents an equity screen for stocks whose codes begin with 60, whose 20-day moving average is above the 120-day average, and whose multiple moving averages cluster closely together. The initial description calls for at least five overlapping averages, while the proposed final logic revises this to using three or four averages with at least two overlapping. The intended rationale is to identify short-term upward movement and potentially reduce trading frequency through alignment.

The article flags possible noise from using too many averages, the omission of longer-term trend and company fundamentals, and the risk of selecting weak businesses based only on price behavior. It suggests adding longer-term indicators and fundamental measures. It includes Python-oriented reference material, but the code is incomplete in the supplied text and does not clearly implement the stated screen. No backtest results or performance evidence are reported, so the screening idea remains unvalidated.

Key ideas

• The screen targets stocks with codes beginning with 60 and a 20-day average above the 120-day average.
• The description first calls for five overlapping averages, then revises the proposed rule to three or four averages with at least two overlapping.
• The suggested rationale is to identify short-term upward trends and reduce trading frequency.
• The article warns that the screen may be noisy and ignores fundamentals and broader trend context.
• The supplied code is incomplete, and the article reports no backtest evidence.

Tags

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