Stock Screening Criteria: Indicator Setups for Finding Strong Stocks

A screen narrows thousands of stocks down to a short list worth looking at. It is not a buy list. The best screens combine a few simple filters: a liquidity floor so you can actually trade the stock, a trend condition, and a setup condition that describes the moment you want to act. Below are five setups to start from, each with the screening criteria and the matching backtest rules.

Start with a liquidity and quality floor

• Average daily volume of at least 500,000 to 1,000,000 shares, so fills are realistic.
• Share price above roughly $10, which filters out many thinly traded and highly erratic names.
• Market cap above about $2 billion if you want steadier behaviour; lower it if you deliberately want more volatile small caps.

Setup 1: Trend leaders

Screen: price above the 50-day SMA, the 50-day above the 200-day, and price within about 10% of its 52-week high. These are stocks already in strong, established uptrends.

Backtest: enter when price crosses above the 20-day EMA while the 50-day SMA is above the 200-day; exit on a close below the 50-day SMA; stop at 2× ATR.

Setup 2: Pullbacks in an uptrend

Screen: price above the 200-day SMA but RSI(14) below 40, meaning a healthy stock that has dipped. Look for the pullback to be on lighter volume than the prior advance.

Backtest: enter when RSI(14) crosses above 35 while price is above the 200-day SMA; exit when RSI(14) is above 65; stop at 1.5× ATR; target 2R.

Setup 3: Volume breakouts

Screen: price at a new 20-day or 52-week high, today's volume at least 1.5× its 20-day average, and price above the 50-day SMA.

Backtest: enter when price closes above the upper Bollinger Band and volume is above its 20-day average; exit when price closes below the 20-day middle band; stop at 2× ATR.

Setup 4: Oversold bounces (higher risk)

Screen: RSI(14) below 30 and price below the lower Bollinger Band, ideally in a stock whose 200-day SMA is still rising.

Backtest: enter when price crosses back above the lower band; exit at the middle band; use a tight stop such as 1× ATR. Expect a high win rate with occasional large losses, which is exactly what the stop is for.

Setup 5: Momentum turns

Screen: MACD line crossing above its signal line, price above the 50-day SMA, and the stock outperforming the S&P 500 over the last three months.

Backtest: enter when MACD crosses above its signal line while price is above the 50-day SMA; exit when MACD crosses below the signal line; target 3R with a 2× ATR stop.

From screen to strategy

• Run the screen and pick a handful of names that pass.
• Backtest the matching rules on each of them, not just the one with the prettiest chart.
• Keep the setups that hold up across several symbols and market periods.
• Deploy the survivors as paper agents and add the symbols to your watchlist and alerts.

Doing this in NightShift Trader

Use the Market Hub heatmap and quotes to spot what is moving, or the Pro screener and Stocks Today hotlists to filter by the criteria above. Then paste the backtest rules into the Strategy Builder, test them on the names you found, and deploy what works as a 24/7 paper-trading agent.