Screening Stocks for Moving-Average Convergence and a Rounded Price Pattern

Summary

This post proposes screening stocks for at least five overlapping moving averages, a rounded or arc-shaped price pattern, and a gain greater than zero but below 35% over ten days. The author interprets moving-average convergence as possible short-term stability, the rounded pattern as a possible precursor to a larger move, and the recent return band as evidence of some upward momentum. The article provides pseudocode and a sample that refers to multiple moving averages and a curve filter.

The author notes that the conditions may return too few stocks, may not suit an investor’s risk tolerance, and cannot reliably predict future prices. Suggested changes include adjusting the indicators or time window and considering machine learning. However, the sample implementation is incomplete and internally inconsistent: its moving-average comparisons do not obviously test convergence, and the curve-filter result is not used in the final selection. No empirical validation or backtest results are presented.

Key ideas

• The proposed screen combines five or more overlapping moving averages with a rounded price shape.
• It restricts the ten-day return to a positive value below 35%.
• The post treats convergence as stability and the shape and return filter as potential signs of a future move.
• The author flags limited diversification and uncertain predictive value as risks.
• The sample code is incomplete and does not consistently implement the stated filters.

Tags

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