Stock Screening With Amplitude, a Five-Day Average, and Morning Star

Summary

The document proposes screening Chinese equities for three conditions: price amplitude above a threshold, the close above its five-day moving average, and a positive Morning Star candlestick signal. It presents the combination as a way to find stocks with recent movement and a possible short-term reversal or upward trend. It includes sample formulas and Python-oriented references for calculating amplitude, a rolling average, and the candlestick pattern, then combining the conditions into a selection.

The article cautions that technical signals can produce false positives and that short-term screening may encourage excessive trading or overlook longer-term company value. It suggests considering liquidity, market conditions, industry trends, and company fundamentals, with risk controls such as stop-loss and take-profit rules. No backtest or performance evidence is supplied. The threshold is also inconsistent within the examples: the prose says amplitude greater than one, while the Python reference uses a one-percent comparison. The screening logic should therefore be clarified and independently validated before use.

Key ideas

• The proposed screen combines amplitude, a close above the five-day average, and a Morning Star signal.
• The Morning Star condition is intended to identify a possible reversal pattern.
• The article warns that technical signals may be false and can promote excessive short-term trading.
• The amplitude threshold differs between the prose and the Python reference.
• No backtest or performance results are provided.

Tags

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