2516 Scoring System 8a4825b6

# VCP Screener Scoring System

## 5-Component Composite Score

| Component | Weight | Source |
|-----------|--------|--------|
| Trend Template (Stage 2) | 25% | 7-point Minervini criteria |
| Contraction Quality | 25% | VCP pattern detection |
| Volume Pattern | 20% | Volume dry-up analysis |
| Pivot Proximity | 15% | Distance from breakout level |
| Relative Strength | 15% | Minervini-weighted RS vs S&P 500 |

## Component Scoring Details

### 1. Trend Template (0-100)

Each of the 7 criteria contributes 14.3 points:

| Criteria Passed | Score | Status |
|-----------------|-------|--------|
| 7/7 | 100 | Perfect Stage 2 |
| 6/7 | 85.8 | Pass (minimum threshold) |
| 5/7 | 71.5 | Borderline |
| <= 4/7 | <= 57 | Fail |

**Pass threshold:** Score >= 85 (6+ criteria) to proceed to VCP analysis.

### 2. Contraction Quality (0-100)

| # Contractions | Base Score |
|----------------|-----------|
| 4 | 90 |
| 3 | 80 |
| 2 | 60 |
| 1 or invalid | 0-40 |

**Modifiers:**
- Tight final contraction (< 5% depth): +10
- Good average contraction ratio (< 0.4 of T1): +10
- Deep T1 (> 30%): -10

### 3. Volume Pattern (0-100)

Based on dry-up ratio (recent 10-bar avg / 50-day avg):

| Dry-Up Ratio | Base Score |
|-------------|-----------|
| < 0.30 | 90 |
| 0.30-0.50 | 75 |
| 0.50-0.70 | 60 |
| 0.70-1.00 | 40 |
| > 1.00 | 20 |

**Modifiers:**
- Breakout on 1.5x+ volume: +10
- Net accumulation > 3 days (in 20d): +10
- Net distribution > 3 days (in 20d): -10

### 4. Pivot Proximity (0-100) — Distance-Priority Scoring

Scoring is distance-first. Volume confirmation adds a bonus only within 0-5% above pivot (Minervini: never chase >5% above pivot).

| Distance from Pivot | Base Score | Volume Bonus | Final Score | Trade Status |
|--------------------|-----------|-------------|------------|--------------|
| 0-3% above | 90 | +10 | 100 | BREAKOUT CONFIRMED |
| 3-5% above | 65 | +10 | 75 | EXTENDED - Moderate chase risk (vol confirmed) |
| 5-10% above | 50 | — (none) | 50 | EXTENDED - High chase risk |
| 10-20% above | 35 | — (none) | 35 | EXTENDED - Very high chase risk |
| >20% above | 20 | — (none) | 20 | OVEREXTENDED - Do not chase |
| 0 to -2% below | 90 | — | 90 | AT PIVOT (within 2%) |
| -2% to -5% | 75 | — | 75 | NEAR PIVOT |
| -5% to -8% | 60 | — | 60 | APPROACHING |
| -8% to -10% | 45 | — | 45 | DEVELOPING |
| -10% to -15% | 30 | — | 30 | EARLY |
| < -15% | 10 | — | 10 | FAR FROM PIVOT |

**Volume bonus rules:**
- 0-3% above pivot + volume: +10 points, status = "BREAKOUT CONFIRMED"
- 3-5% above pivot + volume: +10 points, "(vol confirmed)" appended to status
- >5% above pivot: no volume bonus (Minervini: do not chase extended breakouts)
- Below pivot: volume bonus not applicable

**Chase risk rule (Minervini):** Do not buy stocks >5% above their pivot point. Distance determines the base score; volume confirmation is a bonus, not an override.

### 5. Relative Strength (0-100)

Minervini weighting (emphasizes recent performance):
- 40%: Last 3 months (63 trading days)
- 20%: Last 6 months (126 trading days)
- 20%: Last 9 months (189 trading days)
- 20%: Last 12 months (252 trading days)

| Weighted RS vs S&P 500 | Score | RS Rank Estimate |
|-------------------------|-------|------------------|
| >= +50% | 100 | ~99 (top 1%) |
| >= +30% | 95 | ~95 (top 5%) |
| >= +20% | 90 | ~90 (top 10%) |
| >= +10% | 80 | ~80 (top 20%) |
| >= +5% | 70 | ~70 (top 30%) |
| >= 0% | 60 | ~60 (top 40%) |
| >= -5% | 50 | ~50 (average) |
| >= -10% | 40 | ~40 |
| >= -20% | 20 | ~25 |
| < -20% | 0 | ~10 |

## Rating Bands

| Composite Score | Rating | Position Sizing | Action |
|-----------------|--------|-----------------|--------|
| 90-100 | Textbook VCP | 1.5-2x normal | Buy at pivot, aggressive |
| 80-89 | Strong VCP | 1x normal | Buy at pivot, standard |
| 70-79 | Good VCP | 0.75x normal | Buy on volume confirmation |
| 60-69 | Developing VCP | Wait | Watchlist only |
| 50-59 | Weak VCP | Skip | Monitor only |
| < 50 | No VCP | Skip | Not actionable |

### valid_vcp Gate Rule

When the VCP pattern calculator returns `valid_vcp=false` (e.g., contraction ratios exceed 0.75, expanding contractions), the rating is capped regardless of composite score:

- If `valid_vcp=false` AND composite >= 70: rating is overridden to **"Developing VCP"** with guidance "Watchlist only - VCP pattern not validated, do not buy"
- If `valid_vcp=false` AND composite < 70: no override needed (already below actionable threshold)

This prevents stocks with expanding or non-contracting patterns from receiving actionable buy ratings.

## Entry Ready Conditions

A stock is classified as `entry_ready=True` when all of the following conditions are met:

| Condition | Default Threshold | CLI Override |
|-----------|-------------------|--------------|
| `valid_vcp` | `True` | `--no-require-valid-vcp` |
| `distance_from_pivot_pct` | -8.0% to +3.0% | `--max-above-pivot` |
| `dry_up_ratio` | <= 1.0 | — |
| `risk_pct` | <= 15.0% | `--max-risk` |

**Report sections:**
- **Section A: Pre-Breakout Watchlist** — `entry_ready=True` stocks, sorted by composite score
- **Section B: Extended / Quality VCP** — `entry_ready=False` stocks, sorted by composite score

**CLI mode:**
- `--mode all` (default): Shows both sections
- `--mode prebreakout`: Shows only entry_ready=True stocks

## Pre-Filter Criteria (Phase 1)

Quick filter using quote data only (no historical needed):

| Criterion | Threshold | Purpose |
|-----------|-----------|---------|
| Price | > $10 | Exclude penny stocks |
| % above 52w low | > 20% | Roughly in uptrend |
| % below 52w high | < 30% | Not in deep correction |
| Average volume | > 200,000 | Sufficient liquidity |