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Does the IBD Market Pulse Really Work?

| | Posted in: Technical Trading

A reader asked: “Please do an analysis of the IBD Market Pulse column. Do their ‘Market in Confirmed Uptrend’ calls really work?”

Per IBD:

IBD’s Market Pulse in The Big Picture typically has three possible signals – confirmed rally, rally under pressure and market in correction. You might say these different market outlooks are like traffic lights. There’s red, which means stop when you’re driving a car. In the case of ‘market in correction,’ it means stop buying stocks.”

The names of the signals imply a momentum measurement, which tends to lag market behavior to a degree determined by its construction. There is a body of research indicating that momentum does offer some edge at intermediate investment horizons over long sample periods.

It appears that “The Big Picture” column is largely restricted to paid subscribers and that IBD regards subscription-protected information as proprietary per the PROPRIETARY DATA AND INFORMATION section of their Terms and Conditions of Use. Proprietary information is not subject to “fair use” for review as is publicly available but copyrighted information.

There is some publicly available discussion of Market Pulse signals in IBD Forums, but verification of the data there is problematic. Also, the samples there are probably too short for reasonably reliable inference (just a few changes in trend).

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