Filtering for volume-vs-price sign-inversion, second-half-vs-first-half window asymmetry composites, and fundamental disconnection exposes momentum signals whose surface reading looks strong but whose underlying structural composites have decayed.
How to use the screener's diagnostic and warning interpretations to identify momentum signals that are structurally unreliable, show recent-half-vs-earlier-half window decay, or are disconnected from underlying support — the validation counterpart to screening for momentum alignment.
The Question
Is the surface reading of this momentum supported by the underlying composites, or has the substructure already decayed? This question becomes urgent after every strong move. The Momentum Alignment article helps you find stocks where trend, volume, and oscillator observations converge — Trend Alignment, Golden Cross Formation, Volume-Weighted Momentum. But the surface reading of confirmed momentum and the surface reading of momentum whose underlying composites have decayed can look similar in their early stages. The difference is structural — and the standard momentum screen does not surface it.
This article is the diagnostic counterpart to Momentum Alignment. Where that guide answers "find me stocks with confirmed momentum," this one answers "can I trust what I found?" The interpretations here examine whether the surface momentum reading is supported by its underlying second-half-vs-first-half window composites, whether volume runs in the same or opposite direction as price, and whether technical signals that look directionally positive are accompanied by deterioration in the fundamentals.
What Recent-Half Window Decay Looks Like Structurally
The condition the screener calls "momentum exhaustion" is a measurable composite. Within a 60-week window, the system compares the second half of the window to the first half along three dimensions: the size of the price move, the realized volatility, and the average volume. When the recent half shows a smaller price move, lower volatility, and lower volume than the earlier half, the composite fires. The surface trend can still be visible while this composite records that each of the three components has decayed in the recent half relative to the earlier half. This is the gap between what the price chart shows and what the window-asymmetry composites measure.
False signals are a related but distinct problem. A golden cross can form in a range-bound market and fail. A breakout can occur on thin volume and immediately reverse. A stock can show strong relative performance that is entirely driven by sector or index effects rather than company-specific momentum. In each case, the technical signal looks legitimate on the surface, but the underlying structural composites — volume confirmation, window asymmetry, fundamentals — record a different reading.
The screener captures both patterns — window decay inside an existing trend, and structural weakness alongside apparently positive technical events. These are not predictions of reversal. They are descriptions of measurable structural conditions; the formulas do not establish what comes next.
Key Observations
Recent Half of 60-Week Window: Smaller Price Move, Lower Volatility, Lower Volume (typeKey: trend-exhaustion)
What it measures: A composite over a 60-week window of three second-half-vs-first-half asymmetries — the recent half's net price move is smaller than the earlier half's, the recent half's realized volatility is lower, and the recent half's average volume is lower. All three components must record decay in the second half for the composite to fire. The conventional shorthand for this composite is "momentum exhaustion"; the formula records window asymmetry, not future direction.
Data source: Weekly closes (60-week window), realized volatility over each half, average weekly volume over each half.
Negative Correlation Between Weekly Closes And Weekly Volume (typeKey: vol-price-divergence)
What it measures: A sign-inverted Pearson correlation between weekly closes and weekly volumes over the lookback window. The observation fires more strongly when the correlation is more negative — that is, when weeks with higher closes tend to have lower volume and weeks with lower closes tend to have higher volume. The conventional name "volume-price divergence" implies an expected reversal; the formula only records the sign-inverted correlation in the window.
Data source: Weekly closes and weekly volumes over the lookback window.
Price Extreme Position
What it measures: The current price's position within its historical statistical range — distance from a moving average, position within rolling volatility bands, or percentile rank against a lookback. The observation records how extended the current price is relative to that range; it does not predict reversion. Price-extreme readings can persist for extended periods, and the formula does not establish what comes next.
Data source: Current price relative to historical volatility bands, moving-average distances, and percentile rankings.
Interpretations That Emerge
Momentum Exhaustion Profile
What it identifies: Stocks where the surface trend is still visible but the second-half-vs-first-half window composite (smaller recent price move, lower recent volatility, lower recent volume) has fired and the volume-vs-price sign-inverted correlation is negative. The interpretation records this combination of decayed window asymmetry and contrary volume behavior; the typeKey label "exhaustion" is the conventional shorthand, not a directional claim about what comes next.
Limits: The window-asymmetry composite can stay in this state across many weekly bars, and trends can pause, consolidate, and resume. The profile records the current structural composites, not the certainty or timing of any reversal.
Apparent Technical Strength, Structural Fundamental Weakness
What it identifies: Stocks where the technical indicators look strong — trend confirmed, moving averages aligned — but the underlying business fundamentals are deteriorating. Revenue declining. Margins compressing. Earnings quality falling. The price chart says one thing; the financial statements say another. This is one of the most dangerous momentum situations because the technical signals provide false confidence while the fundamental foundation erodes underneath.
Limits: Markets can lead fundamentals — a stock may show strong technicals before improving fundamentals become visible in the data. The diagnostic cannot distinguish between technical strength that will be validated by future fundamental improvement and technical strength that contradicts a genuine fundamental decline.
CompanyGraph