Overbought and bearish setups
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These recipes look for weakness: rallies that have run far, candles where buyers gave up and trends that have turned down. Short sellers use them to find candidates. Long holders use them to spot warning signs in stocks they own.
The picker marks these presets short. A stretched stock can stay stretched, so each recipe pairs the signal with a second condition.
Recipes
High RSI
Stocks with a 14-day RSI above 70: names that have rallied far and fast.
Filters
- RSI(c,14)>70
- How to use it
Check whether the stock is in a long uptrend or spiked on one event. A spike tends to cool faster.
- Warning
A strong trend can hold RSI above 70 for months. Overbought is a description, not a sell signal.
Death Cross
Stocks whose 50-day moving average crossed below the 200-day in the last 5 bars.
Filters
- SMA(c,50)crosses belowSMA(c,200) (within 5 bars)
- How to use it
Use it to screen names out of a long watchlist as much as to build a short one. Check how far price already sits below both averages.
- Warning
Both averages lag, so the cross confirms a decline that has already happened.
Shooting Star
A shooting star in the last 5 bars, with RSI above 65, in stocks trading over $5M a day. The session rallied, then gave it all back, leaving a long upper wick.
Filters
- RSI(c,14)>65
- SMA(bar_dollar_volume,50)>5M
- Daily Shootingstar candlestick pattern within the last 5 bars
- How to use it
Mark the high of the candle. A close below the candle's low on a later bar is the confirmation candlestick traders look for.
- Warning
One candle is one session. In a strong uptrend, shooting stars print and fail often.
Evening Star
A completed evening star in the last 5 bars, with RSI above 60, in stocks trading over $5M a day: an up candle, a small stalling candle, then a down candle.
Filters
- RSI(c,14)>60
- SMA(bar_dollar_volume,50)>5M
- Daily Eveningstar candlestick pattern within the last 5 bars
- How to use it
Check how far the third candle closes into the first one's body.
- Warning
The pattern takes three sessions, so part of the drop has already happened when it completes.
Gravestone Doji
A gravestone doji in the last 10 bars, with RSI above 65, in stocks trading over $5M a day. The session rallied and closed back at its open.
Filters
- RSI(c,14)>65
- SMA(bar_dollar_volume,50)>5M
- Daily Gravestonedoji candlestick pattern within the last 10 bars
- How to use it
Look at the bars after the doji. Confirmation comes from the next sessions, not the doji itself.
- Warning
The 10-bar window is wider than the other candlestick recipes, so some matches are old news.
Overbought Deteriorating Fundamentals
Super planStocks with RSI above 75 whose latest quarterly EPS is at or below the same quarter a year ago: the chart and the income statement disagree.
Filters
- RSI(c,14)>75
Open the scan to see its other filters.
- How to use it
Read why the stock is rising. The market may be pricing a recovery the reported numbers don't show yet.
- Warning
Price often leads earnings. A disconnect is a question to look into, not an answer.
Quick reference
Tips
- Add Market cap≥2B when you screen for shorts. Small, thin stocks can squeeze hard.
- Save a bearish recipe as a scan and run it now and then to see whether a stock you hold shows up.
- Leveraged Deterioration adds debt to the falling-earnings test.