Small Profitable Stock Screen with Moving-Average Confluence and MACD

Summary

This proposed Chinese equity screen combines three conditions: at least five moving averages converge, market capitalization is below 10 billion yuan and the company is not loss-making, and the 15-minute MACD histogram’s negative bars are shrinking. The specified averages are 5, 10, 20, 50, and 200 days. The article interprets their convergence as a possible support or resistance area, profitability and smaller size as company-selection criteria, and shrinking negative MACD bars as a possible momentum reversal signal.

The note describes a hypothesis rather than a tested strategy: it provides no backtest, performance statistics, or operational definition of how close the averages must be to count as converged. It acknowledges market and company risks and the limited scope of using only a few technical and fundamental inputs. Suggested extensions include incorporating market sentiment, adding other factors, and using longer time horizons. The listed filters may be useful for generating candidates, but the document does not show that they reliably identify profitable trades.

Key ideas

• The screen looks for convergence among the 5-, 10-, 20-, 50-, and 200-day moving averages.
• It combines the technical setup with market capitalization below 10 billion yuan and non-negative earnings.
• Shrinking negative MACD histogram bars on a 15-minute chart are treated as a possible reversal signal.
• The article gives no backtest and does not define a tolerance for moving-average convergence.
• Market conditions and company fundamentals can still cause losses.

Tags

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