Methodology
How the Stock Alpha Scanner finds opportunities
The 5-Step Pipeline
Every Monday before markets open, an automated pipeline scans 229+ stocks across 6 major indices and generates actionable signals.
5-Factor Scoring Model
Each stock is scored on 5 factors, totaling up to 100 points. The model identifies stocks that combine undervaluation, rising momentum, and real-world catalysts.
- P/E ratio vs sector median
- P/B ratio vs sector median
- Dividend yield above average
- Return on Equity (ROE)
- Debt-to-Equity ratio
- Dividend track record
- Forward PE improvement
- 6-month and 12-month returns
- Price vs SMA 50 & 200
- RSI in optimal zone (40-70)
- Earnings within 30/60 days
- Priority sector exposure
- Recovery potential (>20% below 52-week high)
- Market cap above $10B
- Above-average trading volume
- Major index membership
Signal Generation
After scoring, top stocks are researched by AI (Perplexity) to verify the quantitative signal with real-world context. The final signal combines both:
BUY Signal
Requires bullish AI research (high confidence) + alpha score above 60, or bullish research (medium confidence) + score above 70. Includes stop loss (2x ATR below price) and take profit (3x ATR above price).
HOLD Signal
Stocks with potential but not enough conviction for a full BUY. Either the AI research is neutral, confidence is low, or the score is borderline.
AVOID Signal
AI research returned bearish sentiment with medium-to-high confidence. Negative catalysts, deteriorating fundamentals, or significant downside risk identified.
Stock Universe
The scanner covers 229+ stocks across 6 major indices, focused on liquid, large-cap names available on DeGiro.
Adaptive Learning
The model tracks every prediction and evaluates outcomes at 30, 60, and 90-day windows. If a factor consistently correlates with correct predictions, its weight gets boosted. Poor-performing factors get reduced.
This creates a feedback loop where the scanner improves over time based on real market outcomes rather than theoretical backtests.
View current model performance →Data Sources
Market Data: Yahoo Finance (yfinance) for price, fundamentals, and technicals.
Supplementary Data: Twelve Data API for additional market data.
AI Research: Perplexity Sonar Pro for real-time news, analyst reports, and sentiment analysis.
Important Disclaimer
This scanner generates signals for informational purposes only. It is not financial advice. Past performance does not guarantee future results. Always do your own research before making investment decisions. The scanner is designed for signal generation only and does not execute trades.
Stay Updated
Telegram alerts are sent automatically for BUY signals after each scan.