Screening Stocks for Rising Bases and Rounded Bottoms

Summary

This note describes a stock screen based on three chart conditions: amplitude above a threshold, a rising price base, and a rounded-bottom pattern. It presents the pattern as a way to find stocks whose lows are gradually moving higher, while filtering out stocks with too little movement. The document gives sample indicator-formula and Python implementations, but the examples differ in how they measure amplitude and define the rising base, so they should not be treated as a single precise specification.

The note warns that chart shapes can be disrupted by short-term price movements and may not unfold as expected. It suggests adding valuation measures, moving averages, MACD, dynamic checks, and other pattern indicators, then evaluating the resulting screen with backtests and live trading. It provides no performance results or evidence that the proposed filters generate excess returns. The method is therefore a pattern-based screening idea whose definitions and parameters require careful testing before use.

Key ideas

• The screen combines price amplitude, a progressively rising base, and a rounded-bottom pattern.
• The document offers sample implementations, but their definitions of the conditions are not fully consistent.
• Short-term price fluctuations can produce misleading pattern signals.
• The author suggests combining the pattern with fundamental and technical filters and evaluating it through testing.

Tags

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