I thought an exclamation point in
the blog title might make this post more interesting. I just remembered that I haven't updated the
Coppock Curve in quite a while. The main
reason for the lack of updating is that this indicator serves no purpose at the
moment since it is a buy indicator that gave its last buy signal back in
2009. It will be useful once again when
the market tanks (as it should have done this year, so says the MensaMonkey).
The following is a "Coppock
Curve basics" re-post from December 2012 that's a re-post from July 2012 (with
updated chart through August 2013)...
As a refresher, the Coppock Curve was developed by a guy
named Coppock. He had been asked by the Episcopal Church to identify buying
opportunities for long-term investors. He thought market downturns were like
bereavements and required a period of mourning so he used 11 and 14 months in
his calculation after the church bishops informed him that bereavement periods
generally last 11 to 14 months. Gotta love the science.
The formula is simple: Coppock = WMA[10] of (ROC[14] + ROC[11]). WMA is the weighted moving average and ROC is the rate of change. If my weighted averages are weighted in the right places, the chart now looks something like this:
The formula is simple: Coppock = WMA[10] of (ROC[14] + ROC[11]). WMA is the weighted moving average and ROC is the rate of change. If my weighted averages are weighted in the right places, the chart now looks something like this:
A buy signal is generated when the indicator is below zero
and turns upward from a trough. The last time that happened was in early 2009.
That's it...end of story. If you are looking for a sell signal using the
Coppock Curve you'll have similar success flipping a coin. There is only 50%
accuracy for sell signals versus 80% accuracy using buy signals.
Why doesn't this work both ways? That's easy (said the monkey). Look back at the history. Coppock is using bereavement period science here. How many times have you heard someone say, "I am so happy he died. I wonder when I'll be sad again".
I'm assuming that we are talking about loved ones rather than enemies.
Why doesn't this work both ways? That's easy (said the monkey). Look back at the history. Coppock is using bereavement period science here. How many times have you heard someone say, "I am so happy he died. I wonder when I'll be sad again".
I'm assuming that we are talking about loved ones rather than enemies.
