Screening Stocks for Large Ranges, Reversal Patterns, and Rising Averages

Summary

This post presents a stock selection screen combining three technical conditions: a daily high-to-low range above a stated threshold, a reversal pattern, and a rising short-term moving average. Its final description specifies that the five-day moving average should be rising and the stock should trade above it. The post includes sample formula and Python-style implementations, then suggests adding other indicators and risk controls such as stop levels and diversification.

The document explains the intended roles of the inputs: range selects volatile stocks, the pattern seeks a reversal, and the moving average indicates short-term direction. It offers no backtest results, sample definition, transaction cost assumptions, or evidence that the combined screen predicts returns. There is also a mismatch between the written reversal description and the code references, so the precise pattern definition should be verified before implementation. The post cautions that moving averages can lag or misrepresent current price behavior, and that market conditions may affect the screen. Treat the criteria as a screening hypothesis rather than a validated strategy.

Key ideas

• The screen combines a large daily high-to-low range, a reversal condition, and a rising five-day moving average.
• The final written rules also require the stock to trade above the five-day average.
• The post supplies example implementations but does not report strategy performance.
• The written reversal description and the code references are not fully aligned.
• The post notes that moving averages can be unreliable and suggests risk controls and diversification.

Tags

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