Screening Stocks by Amplitude, RSI, and the Five-Day Average

Summary

This stock-selection rule screens for shares with daily amplitude above 1%, RSI below 65, and closing price above the five-day moving average. The conditions combine a volatility filter, a momentum indicator intended to avoid high RSI readings, and a short-term price trend filter. The article also describes ranking qualifying stocks by relative price strength and selecting the strongest fifth of the candidates.

The document offers indicator formulas and illustrative Python-style logic, but reports no backtest, portfolio returns, or comparison with a benchmark. It warns that trading above a short moving average does not prove upward momentum, RSI can misclassify conditions, and large price swings do not explain why a stock may rise. It suggests adding other technical indicators and fundamental analysis, though it does not specify how to combine or validate those inputs. The method is therefore a screening proposal rather than evidence of a tested strategy.

Key ideas

• The screen requires amplitude above 1%, RSI below 65, and price above the five-day moving average.
• The article proposes ranking qualifying shares by relative price strength and taking the strongest fifth.
• A short-term moving-average condition does not establish that a stock has durable upward momentum.
• RSI and amplitude each have limitations and can produce misleading selection signals.
• The document provides no performance test or benchmark comparison.

Tags

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