Stock Screening with RSI, Three Down Sessions, and Moving Averages

Summary

This stock screen combines a 14-period RSI below 65, three consecutive declining sessions, and a 20-day moving average above the 120-day average. The intended effect is to find stocks with a longer-term trend filter in place but recent weakness in price action. The document supplies formula and Python examples for applying the conditions, but it presents no backtest, returns, or comparison with a benchmark.

There is an inconsistency in the examples: the text calls for three down sessions, while the formula checks whether each prior close is above its open, which indicates up sessions. The discussion also cautions that the screen may miss stocks in stronger advances and that moving-average relationships can behave differently across industries. It suggests adding valuation measures, but gives no tested evidence that such additions improve results.

Key ideas

• The screen requires RSI below 65 and a 20-day average above the 120-day average.
• Its written rule calls for three consecutive down sessions.
• The sample condition checks prior closes above their opens, conflicting with the stated down-session rule.
• The document gives implementation examples but no performance test.
• Industry differences and missed opportunities in rising stocks are noted as limitations.

Tags

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