Screening for Oversold Stocks with RSI, Order Flow, and Daily Drawdown

Summary

This post describes a short-term stock screen using RSI below 65, an external-to-internal trading volume ratio above 1.3, and a stated daily maximum decline between four and five percent. The proposed idea is to find shares that have pulled back while showing comparatively stronger buying activity, with the hope of identifying rebound candidates. The article includes example selection logic and Python-style code, and discusses adding moving averages, MACD, longer-term price trends, and fundamental measures.

The post offers no backtest, performance results, or risk controls, and it warns that technical signals can fail and that the screen neglects longer-term trends. The prose, SQL-like example, and Python example do not consistently express the same conditions: the code uses proxies and additional filters, while the stated order-flow ratio and drawdown criteria are not cleanly implemented. The screen should therefore be treated as an under-specified hypothesis requiring careful data validation and testing.

Key ideas

• The stated screen combines RSI below 65, an external-to-internal volume ratio above 1.3, and a daily decline between four and five percent.
• The rationale is to find a pullback with comparatively strong buying activity that may precede a rebound.
• The examples include additional filters and proxies that do not consistently match the stated selection rules.
• No backtest, performance evidence, or risk-management procedure is provided.
• The author recommends considering longer-term trends, other technical measures, and fundamentals.

Tags

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