Screening Stocks with RSI, Valuation, and Moving-Average Trend

Summary

This stock-screening rule combines three conditions: RSI below 65, positive price-to-earnings value, and the 20-day moving average above the 120-day average. The moving-average relationship acts as a broad trend filter, while RSI places an upper bound on the indicator and positive PE excludes firms with negative earnings under the measure used. The article frames the combination as a way to join technical and valuation criteria.

It recommends considering company fundamentals and tuning the parameters, but supplies no backtest, return data, or evidence that the screen outperforms a benchmark. Its sample implementation also appears to compare a price-change field with the RSI threshold and contains an incomplete variable reference in the PE calculation, so it should not be assumed to implement the stated rule correctly. RSI and moving-average screens can lag or behave differently across market regimes, and positive PE alone does not establish that a stock is fairly valued.

Key ideas

• The proposed screen requires RSI below 65, positive PE, and the 20-day average above the 120-day average.
• The moving-average condition selects stocks with a shorter-term average above a longer-term average.
• The article recommends adding fundamental analysis and tuning the thresholds.
• No strategy performance evidence is provided, and the sample code appears inconsistent with the stated RSI rule.

Tags

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