Screening Stocks for Moving Average Convergence and a Limited Opening Gain

Summary

This document describes a stock screen intended to find possible trend changes. It looks for equities whose moving averages converge, using at least five averages as the selection condition, and also imposes a limit on the indicated pre-open gain. The underlying hypothesis is that clustered averages may precede a change in price direction. The article suggests experimenting with the number of averages and with alternative reference prices, while incorporating industry, policy, and broader economic context.

It includes a sample selection routine, but provides no backtest, market data, or evidence that convergence predicts profitable reversals. The accompanying logic is not fully consistent with the verbal screen: its calculations do not clearly define how average convergence or the pre-open percentage gain is measured, and the stated historical year is not reflected in a reproducible data procedure. The idea is therefore a heuristic requiring precise definitions and out-of-sample testing.

Key ideas

• The screen seeks stocks with at least five converging moving averages and a limited pre-open gain.
• The proposed rationale is that clustered averages may precede a trend change.
• The article suggests varying the average count, reference price, and market context.
• No performance evidence is supplied, and the sample calculations leave key conditions unclear.

Tags

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