Frequently Asked Questions

Market Lab Report
IBD vs VoSI on Ascending Bases and MDM

Q: You mentioned that OSTK was breaking out of an ascending base on 6/27/13. I thought it was too early as the base is only 7 weeks long. According to IBD, the entire wave-of-three move should generally take between nine and 16 weeks to build. Do you have any precedent on shorther ascending bases that have worked?


A: I've always created my own rules, though some are inspired by O'Neil. IBD's calls in market direction since 1994 were never based on statistical rules up until more recently which is why MDM has well outperformed Big Picture market calls since 1994.

As for basing patterns, market context is very important, thus there can be ascending bases shorter than 9 weeks, though usually not shorter than 6 weeks since it takes that minimal amount of time to work out the wave-of-three. A classic example of an ascending base being shorter than 9 weeks is SCHW in 1Q of 1999.

Published: Jun 28 2013