🏠 Home 📊 Base Rate 🔬 Methodology ℹ️ About ⚠️ Disclaimer 🇰🇷 한국어(Korean)
🔬 Methodology · How It Works

We capture pre-breakout early signals,
not after a surge

The DawnScan scanner is not a service that alerts you to stocks that have already surged. It detects technical preparation signals that appear before price moves significantly. This page transparently explains what signals the scanner looks at, how it filters stocks, and what criteria it uses to score hit rate.

1Why 'Before a Surge'?

Most stock recommendation alerts arrive after stock prices have already risen significantly. Chasing buys carries high volatility and downside risk. This scanner detects the preparation phase before a price surge occurs—the phase where institutional actors begin accumulation or volatility contracts right before an explosion.

Core Principle — Stocks selected by the scanner are not stocks that are "rising right now," but stocks that "show preparation signals that might rise soon." A surge is not guaranteed, and sideways movement or declines can occur even with a high score. Signals are probabilistic patterns, not predictions.
24 Key Early Signal Patterns

Each pattern is meaningful on its own, but the higher the score becomes when multiple signals appear simultaneously. The scanner combines about 20 technical indicators, including the patterns below.

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Bollinger Band Squeeze
Bollinger Band Squeeze
When Bollinger Band width contracts to the bottom 20–25% on a 1-year basis, it signals an impending volatility explosion. Just as a compressed spring bounces back stronger, the narrower the band becomes, the stronger the subsequent directional move tends to be.
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OBV Accumulation Signal
On-Balance Volume Accumulation
OBV (On-Balance Volume) accumulates volume based on price direction. When the stock price moves sideways while OBV steadily rises, it indicates quiet accumulation occurring at low price levels. The signal becomes stronger when up-volume is 1.3 times or more than down-volume.
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Pullback Reversal
Pullback Reversal
Appears during a short-term correction (pullback) after a strong rise when RSI approaches oversold territory (40 or below), or when downside is limited while ADX maintains a trend of 25 or higher. A correction that does not reverse an uptrend can be a re-entry opportunity.
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Consolidation Below Resistance
Consolidation Below Resistance
When stock prices move within a narrow range within –6% of the 20-day high, selling pressure is exhausted and breakout energy accumulates. The signal is reinforced when accompanied by Bollinger contraction + volume decrease.
32-Stage Funnel Algorithm

Every day, all US NASDAQ and NYSE stocks (about 6,000) are compressed through two stages. Stocks that fail to pass each stage are excluded from the results.

All 6,000+ Stocks → Stage 1: Rule-based ~40 Stocks → Stage 2: TOP 10 + AI Rationale
1
Rule-Based Indicator Scoring
All 6,000+ Stocks → Top ~40 Stocks
Liquidity Filter — Immediately excludes stocks falling short of minimum price or trading volume
Market Regime Adjustment — Score entry thresholds change according to SPY/QQQ regime (Risk-On/Neutral/Risk-Off). Strengthens filtering by raising standards during Risk-Off markets
Combination of 6 Technical Indicators — RSI · ADX+DI · Bollinger Squeeze · OBV Rise · Volume Ratio · Position Relative to 20-Day High
Auxiliary Indicator Additional Score — ATR Volatility · 5-Day Change · Relative Strength (RS) vs SPY · Gap Breakout · Weekly Chart Features
Risk Penalty — Deducts score for RSI overheating (82+), ATR surge, short-term surge (5-day +30%+)
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2
Qualitative Analysis + AI Rationale
Top ~40 Stocks → Final TOP 10
Catalyst Tagging — Earnings release date, estimated EPS, event D-N badges
Short Volume Risk — Caution/High Risk flag for stocks with 50%+ short volume ratio
Latest News Context — Attaches news per stock and reflects positive/negative context
LLM Rationale Generation — Synthesizes above information to generate rationale in Korean (rankings are fixed by rule scores; falls back to rule-based logic if no API key)
Risk Flag Confirmation — 3-level classification: Watch (few overheating signals · relatively stable candidate for monitoring), Caution (partial risks like volatility, short-term overheating, short ratio — observe closely), High Risk (already surged / RSI overheated / overextended high or earnings imminent — risk of chasing)
4Hit Rate Scoring Criteria

The core question of the 'pre-breakout early signal scanner' is just one — "Did the stock price actually rise after selection?" Scan results are recorded daily based on the criteria below, and post-performance is automatically tracked.

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Entry Price Standard
Scan Day Close
US market closing price on the scan date.
Based on close, not next-day open.
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Hit Standard
+15%
Reaching +15% or higher
within 20 trading days (~1 month) is a HIT.
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Tracking Period
60 Trading Days
~3 months. Afterwards, final performance
is finalized as 'closed'.
MFE (Maximum Favorable Excursion) Records the highest return rate within the tracking period. Given the nature of a pre-breakout scanner, whether "that move actually occurred" is a more critical metric than the return at a "specific point closing price."
Hit Rate Number of HIT stocks ÷ Total number of stocks × 100 (%). Hit Rate is also compiled by setup type (Bollinger contraction, pullback, etc.).
Tracking Status Stocks that have not passed 60 trading days after selection are marked as tracking, and afterwards finalized as closed.
Disclosure Principle All past scan performances are transparently disclosed in real time on the /track page. No selective disclosure, no post-hoc modifications.
5Not Investment Advice · Proper Usage
⚠️ Core Principle — This service is not investment advice
Stocks selected by the scanner are merely technical screening candidates. High scores and HIT signals are not recommendations to buy. All investment decisions and the resulting gains or losses are the sole responsibility of the investor.
✓ Recommended Use scanner results as a starting point for additional research — directly verify fundamentals, news, and industry trends
✓ Recommended Create a watchlist referencing scores and signals, comparing with actual charts to make your own judgment
✓ Recommended Objectively verify scanner performance using the hit rate on /track to directly evaluate reliability
✗ Not Recommended Buying immediately relying solely on scan results — signals are probabilistic patterns and have margins of error
✗ Not Recommended Chasing buys on 'High Risk' flagged stocks — this is an alert for short-term overheating or high short ratio
✗ Not Recommended Allocating your entire portfolio relying solely on scan results
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Today's Scan TOP 10
Actual scan results · Includes rationale in Korean
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Scanner Hit Rate
Transparent disclosure of past scan performance · HIT rate compiled
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Daily Report
Archive of scan results by date