Screening Stocks with RSI, Seven Down Days, and Order-Flow Ratio

Summary

The document proposes a stock screen combining three conditions: RSI below 65, seven consecutive declining sessions, and an outside-to-inside trading volume ratio above 1.3. Its rationale is to pair a relatively weak technical reading and a run of losses with a volume-based indication of buying activity. The article also sketches indicator formulas and a Python example for applying these filters to Chinese shares.

The evidence is descriptive; it provides no backtest, return series, or comparison with a benchmark. There are also inconsistencies between the stated strategy and the sample code: the code’s seven-day candle check skips candidates when all seven closes are at or below their opens, and the RSI data source shown does not clearly establish the stated RSI calculation. The author warns that the screen omits fundamentals, so a prolonged decline may reflect company-specific deterioration rather than a temporary technical setup. Valuation measures are suggested as possible additions, without tested results.

Key ideas

• The proposed screen requires RSI below 65, seven declining sessions, and an outside-to-inside volume ratio above 1.3.
• The author interprets the ratio as a possible sign of stronger buying activity.
• The document includes formula and Python examples, but the code does not fully align with the described conditions.
• The screen omits company fundamentals and may select stocks falling for fundamental reasons.

Tags

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