Screening Profitable Small-Cap Stocks with MACD and Recent Highs

Summary

This post describes an equity screen requiring MACD to be above its zero line, a two-day high condition, market capitalization below a stated ceiling, and positive net profits over five years. It discusses the rationale for combining a momentum-style indicator and recent price highs with size and profitability filters. The post also includes formula and Python examples intended to implement the screen using price history and fundamental data.

The author flags reliance on a few technical indicators, fixed market-cap limits, and the omission of liquidity and broader fundamental analysis as risks. Suggested refinements include industry-aware size comparisons and additional technical, fundamental, and liquidity checks. No performance results or validation are reported. The supplied examples may not fully match the prose: the MACD expression and profit tests need careful interpretation, and the Python example has platform-specific data calls. These details should be verified before use, and the screen should be tested with point-in-time data and realistic trading costs.

Key ideas

• The screen combines MACD above zero, a two-day high condition, a market-cap ceiling, and five years of positive profits.
• The post pairs technical price filters with company-size and profitability criteria.
• Fixed size limits may not be comparable across industries, and the rule does not directly screen for liquidity.
• The examples require verification because formula and implementation details may not precisely express the described conditions.
• No backtest or evidence of profitability is provided.

Tags

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