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Does IBD Relative-Strength Leaders actually work?

OVERSOLD

Works, but nothing like as well as it is sold.

The claim

Buy the highest relative-strength names near 52-week highs — IBD

What we did

Tested against Equal-weight survivorship-free peer universe + SPY, net of cost, 2003–2026, OOS ≥ 2021.

The result

Result: -6.1 net-αSPY %/yr (beats index net of cost)

vPEERS +2.2 but net-αSPY −6.1%/yr

Verdict

Price leadership alone picks winners over peers but loses to the index net of cost. Momentum without an earnings filter is half a strategy.

What the test did and did not do

survivorship-free universe
net of real costs
tested out of sample
point-in-time data
checked for look-ahead

Almost nobody publishing a backtest says which of these they did. We list the ones we failed as well as the ones we passed.

Tested 2026-06-23. The same treatment, applied to every other system, is on the test bench.

← Earnings-Surprise (SUE / PEAD) All findings Random-50 (null control) →

Written with AI assistance from our own test database. The numbers are computed, not composed.
General market commentary for education, not personalised investment advice. Backtested results are hypothetical. Trading carries a real risk of loss.