What It Detects
Stocks with:
- Multiple moving averages in perfect alignment
- Strong directional trend (up or down)
- Price above/below key moving averages
- Sustained momentum without overextension
The Formula
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and roc(20) > 10
How It Works
c > sma(20)- Price above 20-day MA (short-term uptrend)sma(20) > sma(50)- 20-day above 50-day (medium-term uptrend)sma(50) > sma(200)- 50-day above 200-day (long-term uptrend)roc(20) > 10- 10%+ gain in 20 days (momentum confirmation)
This creates a "staircase" pattern with all MAs trending higher.
When to Use
Best for:
- Trend following strategies
- Swing trading (hold 2-8 weeks)
- Position trading (hold 2-6 months)
- Finding established momentum plays
Avoid when:
- Looking for reversal trades (this finds continuations)
- Need immediate entry (stocks often extended)
- Market in choppy sideways action
- Seeking quick day trades
Why Trend Alignment Matters
The "Staircase" Effect
When all moving averages align properly:
- Price > 20MA > 50MA > 200MA = All timeframes bullish
- Institutional money accumulating
- Retail following momentum
- Algo trend-following systems engaged
- Technical support layers stacked
What It Means
Strong uptrend:
- Minimal pullbacks
- Higher lows on consolidations
- Volume increases on rallies
- News often follows price (narrative justification)
Beware exhaustion:
- RSI > 70 for extended periods
- Vertical price spikes
- Gap-ups on no news
- Volume declining on new highs
Parameters You Can Tweak
Ultra-Strong Trend
c > ema(10) and ema(10) > ema(20) and ema(20) > ema(50) and ema(50) > ema(200) and roc(20) > 15
- EMAs for faster reaction
- 15%+ move in 20 days (very strong)
- Catches explosive momentum stocks
Conservative Trend (Less Extended)
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and roc(20) > 5 and roc(20) < 15
- 5-15% range (momentum without overextension)
- Better entry timing
- Lower risk of immediate pullback
Bearish Trend (Downtrend)
c < sma(20) and sma(20) < sma(50) and sma(50) < sma(200) and roc(20) < -10
- Inverse alignment (downtrend)
- For shorting or avoiding
- All MAs acting as resistance
Trend + Volume
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and v > sma(v, 50) * 1.2
- 20%+ above average volume
- Confirms institutional participation
- More sustainable trends
Large-Cap Only
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and roc(20) > 10 and market_cap > 10B
- Blue-chip stocks only
- Smoother, more reliable trends
- Lower volatility
Example Columns to Add
Price: c
20MA: sma(20)
50MA: sma(50)
200MA: sma(200)
20-day %: roc(20)
52-week %: roc(252)
RSI: rsi(14)
ATR%: atrp(14)
Volume Ratio: v / sma(v, 50)
Entry Strategies
Pullback Entry (Conservative)
- Scan finds strong trend
- Wait for pullback to 20-day MA
- Watch for bullish reversal candle
- Enter when price bounces off 20-day MA
- Stop below 50-day MA
- Target: 10-20% or next resistance
Breakout Entry (Aggressive)
- Scan finds trend near consolidation breakout
- Enter on break of consolidation high
- Volume confirms (1.5x+ average)
- Stop below consolidation low
- Trail stop below 20-day MA
Continuation Entry (Medium Risk)
- Stock appears on scan
- Check RSI not > 75 (avoid overextension)
- Enter at current price
- Stop below 20-day MA (tight)
- Take partial profits at 10%, let rest run
Exit Strategies
Profit-Taking Signals:
- 20-day crosses below 50-day (momentum fading)
- RSI divergence (price higher, RSI lower)
- ATR spike + big gap (climax move)
- Hit predetermined target (15-25% typical)
Stop Loss Levels:
- Tight: Below 20-day MA (3-5% typical)
- Medium: Below 50-day MA (7-10% typical)
- Wide: Below 200-day MA (position trading)
Warning Signs:
- Volume declining on rallies
- Price struggling to make new highs
- 20-day MA flattening
- Sector weakness appearing
Trend Quality Assessment
High Quality Trend
- All MAs sloping upward (not flat)
- 20-MA separation from 50-MA > 5%
- 50-MA separation from 200-MA > 10%
- RSI between 50-70 (momentum without exhaustion)
- Volume increasing on up days
- Sector also in uptrend
Low Quality Trend
- Flat 200-day MA (no long-term direction)
- Small separation between MAs (< 2%)
- RSI > 75 extended (overbought)
- Volume declining
- Isolated move (sector weak)
- Recent parabolic spike
What to Watch For
Strong trend signals:
- First pullback to 20-MA after breakout
- Consolidation with tightening range
- Higher lows on each pullback
- Pre-market showing strength
- Sector rotation into this group
Warning signs:
- Gap-up on minor news (exhaustion)
- Multiple failed attempts at new high
- Increasing volatility
- Insider selling
- Sector starting to roll over
Common Mistakes
- Chasing extended stocks - Wait for pullback if RSI > 70
- No stop loss - Even strong trends reverse eventually
- Ignoring market - Individual trends need market support
- Holding through MA breakdown - Exit when 20 crosses below 50
- Overleveraging - Strong trend ≠ risk-free trade
- Buying parabolic moves - Vertical moves = exhaustion coming
- Ignoring volume - Declining volume = trend losing steam
Combining with Other Indicators
Trend + RSI
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and rsi(14) > 50 and rsi(14) < 70
RSI confirms momentum without overbought condition
Trend + MACD
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and macd() > macd_signal() and macd_hist() > 0
MACD histogram positive = accelerating momentum
Trend + Bollinger Bands
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and c > bb_lower(20, 2) and c < bb_upper(20, 2)
Price within bands = not overextended
Trend + ATR Filter
c > sma(20) and sma(20) > sma(50) and sma(50) > sma(200) and atrp(14) > 1.5 and atrp(14) < 4
Moderate volatility = tradeable without excessive risk
Timeframe Considerations
Daily Charts (Standard)
- Hold 2-8 weeks
- Best for swing trading
- Use 20/50/200-day MAs
Weekly Charts (Long-term)
- Hold 3-12 months
- Best for position trading
- Use 10/20/40-week MAs
- Filters out daily noise
4-Hour Charts (Aggressive)
- Hold 3-10 days
- Intraday trend following
- Use 20/50/100 period MAs
- More signals but noisier
Market Context (Critical!)
Trade trend stocks when:
- SPY above 200-day MA
- SPY showing MA alignment too
- VIX < 25 (stable volatility)
- Sector rotation happening
Avoid trend trades when:
- SPY below 200-day MA (bear market)
- SPY MAs misaligned (choppy)
- VIX > 30 (high volatility breaks trends)
- Market breadth negative
Individual stock trends need market tailwind to work.
Sector Rotation Strategy
Trend strength often appears in waves by sector:
Early Bull Market:
- Technology
- Consumer Discretionary
- Financials
Mid Bull Market:
- Industrials
- Materials
- Real Estate
Late Bull Market:
- Energy
- Healthcare
- Utilities (defensive shift)
Run this scan on sector ETFs to identify rotation.
Position Management
Building Position
- Enter 25% on trend confirmation
- Add 25% on first successful pullback
- Add 25% if breaks to new high
- Keep 25% dry powder for deep pullback
Trailing Stops
- Aggressive: Trail below 20-day MA
- Conservative: Trail below 50-day MA
- Hybrid: Start at 50-MA, move to 20-MA after 15% gain
Profit Taking
- Take 25% at 10% gain
- Take 25% at 20% gain
- Let 50% run with trailing stop
- Respect technical breakdown (20x50 MA cross)