Stock Screening with Turnover, Reversal Candles, and Price Range

Summary

This stock-selection rule combines a turnover rate between 3% and 12%, a pattern described as an engulfing reversal, and amplitude above 1. The article presents turnover as a liquidity and activity filter, the reversal pattern as a possible trend-change signal, and amplitude as a measure of price movement. It suggests adding industry or financial measures and adjusting the conditions if the screen is too restrictive.

The document includes formula and Python examples, but does not report backtest results or define the reversal pattern in enough detail to evaluate it consistently. Some implementation details also appear inconsistent with the stated rule, including a market-capitalization filter in the example and differences in turnover boundaries. The article notes that a narrow set of price-based conditions can miss fundamental context and may return no qualifying stocks. This is a candidate-screening recipe, not evidence that the selected shares will outperform.

Key ideas

• The screen requires turnover between 3% and 12%, a reversal pattern, and amplitude above 1.
• Turnover is used as a filter for trading activity, while amplitude represents price movement.
• The article treats the reversal pattern as a possible signal of a change in price direction.
• The examples add conditions and contain boundary differences that do not precisely match the stated screen.
• No performance evidence is provided, and the article identifies the screen’s narrow scope as a risk.

Tags

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