Stock Screen for Seven Down Days, Rising DEA, and Moderate Turnover

Summary

This proposed stock screen combines a turnover rate between 3% and 12%, seven consecutive declining sessions, and a rising DEA line from MACD. The author frames the combination as a possible early signal of a trend reversal: recent weakness is paired with an improving indicator, while turnover limits the pool to stocks with a specified activity range. Formula and Python examples illustrate how the conditions might be checked.

The document does not provide a backtest, measured accuracy, or evidence that the screen predicts reversals. It warns that indicator-only selection may identify companies with weak fundamentals and that reversal signals can be unreliable. Suggested refinements include incorporating valuation measures such as price-to-earnings or price-to-book ratios and evaluating risk and return together. There is also a mismatch between the stated seven days of decline and the Python example's test of seven sessions where close is below open, which checks down sessions rather than a strictly declining price series.

Key ideas

• The screen requires turnover between 3% and 12%, seven consecutive declining sessions, and a rising MACD DEA value.
• The combination is presented as a preliminary trend-reversal filter.
• The article supplies formula and Python examples but no backtest or accuracy statistics.
• Fundamental filters and broader risk assessment are proposed as improvements.
• The code example's down-session test may not enforce seven consecutive lower prices.

Tags

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