Screening Small-Capitalization Stocks by Range, Trend, and Profitability

Summary

This post proposes a stock-selection screen combining daily price range, moving-average direction, a market-capitalization ceiling, and a profitability condition. In broad terms, it seeks stocks with noticeable daily movement, an upward-sloping short-term price trend, relatively small capitalization, and no recent losses. The post describes the mix as incorporating both price behavior and company results.

It cautions that relying on past profitability may not predict future performance and that a capitalization limit can overlook longer-term business conditions. Possible refinements include adding dividend yield or other filters and adjusting the size and loss criteria. The article includes example indicator logic and sample code, but the code’s moving-average ordering does not clearly match the stated upward-divergence condition, and profitability is represented through a limited metric. No portfolio construction, historical test, transaction-cost analysis, or performance evidence is supplied, so the screen should be read as a preliminary filter rather than a validated strategy.

Key ideas

• The proposed screen combines daily price amplitude, moving-average direction, a market-cap ceiling, and profitability history.
• It aims to select smaller companies showing short-term price strength without recent losses.
• The author notes that past profitability may not persist and that the market-cap range may need adjustment.
• The example implementation does not clearly align all its calculations with the stated screening rules.
• The document provides no backtest or evidence that the filter improves investment outcomes.

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