Stock Screening with Moving Average Confluence and a Trend Filter

Summary

This note describes an equity screen for stocks with at least five overlapping moving averages and a 20-day moving average above the 120-day average. The proposed interpretation is that clustered averages indicate short- and long-term trend agreement, while the shorter average above the longer one signals stronger recent direction. It also suggests adding 60- and 90-day averages and using MACD and RSI as further filters.

The document provides no backtest, performance figures, or evidence that the screen predicts returns. Its code example is incomplete and does not clearly implement the stated five-average overlap condition. The note itself warns that moving average clustering can miss volatile stocks and may be less informative when the long-term trend is unclear. The selection rules should therefore be treated as a screening idea, not a validated strategy.

Key ideas

• The screen seeks stocks with at least five overlapping moving averages.
• It requires the 20-day moving average to exceed the 120-day moving average.
• The note proposes adding intermediate averages, MACD, and RSI as extra filters.
• No performance evidence is supplied, and the code example is incomplete.

Tags

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