Stock Screener: Low Risk High Momentum Stocks

Let’s now try to create a screener to identify stocks with low risk and high momentum. 

Step 1: Creating the Screen

To do this, we’ll focus on a blend of technical, risk, and profitability metrics to create this screen. Here’s the list of metrics we’ll use.

• Relative Strength Index (RSI 14). RSI can help spot when the momentum of a stock's price is changing. A rising RSI might indicate increasing bullish momentum, while a falling RSI could signal increasing bearish momentum.
• 50 Day SMA > 200 Day SMA (golden cross). The Golden Cross is considered a bullish signal as it tells us the stock's price momentum is shifting upwards after a period of consolidation or downtrend. 
• Beta < 1.1. This tells us the stock’s volatility compared to the market. It will help us filter stocks that can survive downturns and also give solid returns during a bullish phase.
• ADX > 25. This aims to filter stocks that signal a strong trend presence.
• EPS TTM growth 1Y > 18. A rising EPS TTM could indicate improving profitability or efficiency, potentially making the stock more attractive. 

Let’s see how the same looks on our sharpely’s Advance Screen Builder now:

Step 2: Filter the Stocks

Eager to see the results? Here’s a snapshot of stocks that are filtered after using these parameters.

Step 3: Backtest the Screen

29 stocks are filtered. Let us now see how they faired against the benchmark index. Here’s a snapshot of the Backtest Result.

An impressive 362% v/s Benchmark’s 110%. 

Let us now move on to another example.