Screening for Companies Using Technical Indicators

GuruFocus' All-in-one Screener includes several technical indicator filters

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Aug 10, 2017
Summary
  • Technical indicators include relative strength index, simple moving average
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GuruFocus' All-in-one Guru Screener allows users to screen using technical indicators like the relative strength index and simple moving averages.

Background

Figure 1 gives a screen shot illustrating a wide range of technical indicators listed under the Screener's Price tab.

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Figure 1

You screen for these filters as you would for any other filter. For example, if you want to look for companies with a 14-day relative strength index (RSI) less than 30, you would select the second drop-down menu for “14-Day RSI” and choose 30 from the list of values as Figure 2 illustrates.

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Figure 2

How it works

GuruFocus' All-in-one Screener supports screening for a wide range of technical indicators, including the relative strength index (RSI), the six-month price index, the simple moving average, Bollinger Bands, and momentum indicators like 6-1 month momentum and 12-1 month momentum. Each technical indicator can give insights on how a company’s stock price might trend going forward.

For example, you can look for undervalued companies using either the relative strength index (RSI) or the six-month price index. The former determines whether a company's stock is “overbought” or “oversold.” RSI values of 70 or above suggest possible overvaluation while RSI values of 30 or below suggest possible undervaluation.

Figure 3 illustrates the available RSI filters in the All-in-one Screener.

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Figure 3

The price index, on the other hand, highlights the stock’s price trend over the past six months. A price index less than 1 indicates the company’s share price declined during the six-month period, which can either lead to a value opportunity or a potential value trap depending on the company’s profitability.

Simple moving average

The simple moving average gives the arithmetic average of share prices over a specific period. GuruFocus’ All-in-one Screener supports screening based on the 20-day SMA, 50-day SMA and 200-day SMA: Users can screen for price % above or % below the SMA as Figure 4 illustrates.

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Figure 4

Bollinger Bands

Bollinger Bands extend the simple moving average line to an upper band that is two standard deviations above the 20-day SMA and a lower band that is two standard deviations below the 20-day SMA. Figure 5 illustrates the Screener filters for price to the upper bound Bollinger Band value and price to the lower bound Bollinger Band value.

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Figure 5

Momentum indicators

The 6-1 month momentum indicator captures the return of the stock from six months ago to one month ago while the 12-1 month momentum indicator captures the return of the stock from 12 months ago to one month ago. Figure 6 illustrates the Screener filters for the momentum indicators.

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Figure 6

Disclosures

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