Stock Screening with MACD Contraction and Moving-Average Convergence

Summary

This proposed stock screen combines three technical conditions: daily price amplitude above 1%, convergence among five moving averages (5, 10, 20, 30, and 60 days), and a shrinking MACD histogram on a 15-minute chart. The article interprets the amplitude condition as indicating active price movement, moving-average convergence as a period of balance, and a contracting negative MACD histogram as weakening selling pressure. It also proposes adding valuation filters such as price-to-earnings or price-to-book measures.

The document includes indicator formulas and sample Python logic, but it does not provide backtest results or evidence that the combined conditions predict reversals. Its stated caveats include the omission of fundamentals and the possibility that technical indicators miss changes in a company or market. The code's definitions may not match the prose: for example, counting distinct moving-average values does not establish that they are converged, and the histogram comparison shown may not represent a shrinking negative bar. Treat the screen as a hypothesis requiring precise definitions and testing.

Key ideas

• The proposed screen combines daily amplitude, five moving averages, and a 15-minute MACD histogram condition.
• The method interprets converging averages as balance and contracting negative MACD bars as easing selling pressure.
• Valuation measures are suggested as additional filters.
• The article gives no performance evidence, and the sample code may not implement the stated conditions accurately.
• Fundamental changes and technical-indicator limitations are identified as risks.

Tags

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