Coppock indicator

The Coppock applied to the current market

Consider the chart of the All Ords Index. In about July of 2016 a positive Coppock signal was given (shown below by the green arrow). This indicated that investors should be starting to buy stocks. It is worth looking at charts of the major stocks to note that most stocks started strong positive moves at about that time.

What perhaps makes the July Coppock signal more persuasive is that a Coppock entry signal was evident at about the same time during 2016 for almost every major world index. One of the very few exceptions was the Nasdaq index where because of the very bullish nature of that index, the Coppock failed to move below the zero line.

The recent widespread occurrence of the Coppock signal might suggest that there is a high probability that all world markets will be positive this year. But that is a matter of probability and… Continue reading

The Coppock indicator and the Australian market.

The Coppock indicator is a long-term momentum oscillator based on rate of change. It was developed to identify long-term investment opportunities in the S&P 500 and Dow Industrials indices. The signal is very simple. A buying opportunity is identified when the Coppock indicator is negative and becomes more positive (but crossing the zero line is not an entry signal).

From looking at many charts, it is evident that there is little difference in subsequent movement of the index whether there is a deep or a very shallow Coppock trough. The Coppock is a lagging indicator and the signal is very general and often several months late. A more precise entry signal is provided by a monthly MACD crossover but this signal is usually later still than the Coppock.How useful is the Coppock signal? The monthly chart of the All Ords Index below, shows that there were nine Coppock entry… Continue reading

Elliot Wave or Coppock. A Bear or a bull?

As noted previously, some analysts would see the current Elliot Wave pattern as persuasive evidence for an ongoing Australian bear market.

The chart below shows the ASX200 over an 11-year period with the Elliot Wave A, B, C waves of the bear market labelled in red. Wave A started in November 2007 and Wave B started in March 2009. Wave C which started in March 2015 might be expected to run for some time and distance. The target for the C wave (the end of this bear market) from this chart is probably at least the 3150 level which was the low of the 2008 bear market.

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While the Elliot Wave projection for a bear market is one possible outcome, the Coppock indicator on the chart below shows a very different signal in about June 2016 which suggests a future bull market in Australian equities.

These two longer term… Continue reading

The Coppock indicator and current market risk

The Coppock indicator is very useful for finding the probable start of a new bull market and is used on the monthly charts of an index. Over the last 40 years the Coppock indictor has provided a high probability indication of the start of a bull market in Australian equities. An entry signal to a new bull market is given when the Coppock indicator is negative and then starts to rise. It is a lagging indicator, so lacks precision but nevertheless is very useful for investors.

coppock-16

From the above chart the Coppock gave an entry signal to a new “bull” market in Australian equities in about July of 2016. The question is whether this is a valid entry signal or one of the few false starts that Coppock has provided over the past 40 years.

When one looks at current world political and economic events, there is much uncertainty. World… Continue reading

Is the Coppock indicator effective on short term charts?

The Coppock indicator is a popular and effective indicator for finding the start of a new bull market. It was developed by Edwin Coppock to find the start of the bull market on the Dow Jones index. The Coppock has been widely used on other indices and has effectively provided an entry signal for every bull market on the Australian All Ordinaries index over the past 30 years. The following chart shows the Coppock indicator on a monthly chart of the ASX200 where it gave very good signals for entry to all three bull markets over the last 10 years.
Coppock mthly
This indicator is now widely applied to any index and can also be used effectively on the monthly chart of any stock as long as that stock has very high liquidity. The Coppock indicator was developed only for use with monthly charts and the question is whether it can also… Continue reading

Is this the expected market correction?

With the American market rather overheated given fundamentals in the US and in Europe a correction can be expected but is the pull back of the last few days the start of this correction? Consider the daily chart of the S&P500 below.  The S&P500 has moved in a channel over the past 4 months for a gain of some 17%.  If this current correction moves below support at about 1400 indicated by the dotted line then a further move down for this index is likely. 

Consider now the monthly chart of the S&P500 below.  This chart shows a strong RSI divergence which indicates a high probability that a reversal of trend in the S&P500 is likely.  But my interpretation of this chart is that a reversal is not likely to occur yet – the RSI needs more time to develop.  

Supporting evidence for… Continue reading

A psychological dilemma for the investor

What is an investor to do?  The Australian economy is slowing, consumer confidence is low and the mining boom seems to have finished.  Looking overseas, the US has considerable political problems, not to mention a ballooning sovereign debt.   In Europe things seem to go from bad to worse with no solutions in sight.  And now China our biggest trading partner is slowing.   Put all of these things together and you have a scenario where the average investor is totally demoralized and simply leaves his cash in a bank and would not possibly contemplate equities.

And yet the experienced investor always has to ask if in the depth of investor despair whether or not this is really the start of a new bull market.  Enter the Coppock indicator a remarkably effective indicator, so effective in fact that I have found that if there… Continue reading

The Coppock paradox

The Coppock indicator was developed as a signal for the start of the bull market on the DOW Jones index. It is now applied widely to all indices.  It is a remarkably effective indicator, so effective in fact that I have found that if there is a Coppock signal on the index then there is such a high probability of a new bull market that I do need to be seriously buying into that market. The chart below shows the Coppock entry signal for the ASX200 in July of 2012 as well as the entry signal for May of 2009. 

The Coppock does however give false signals.  I have found that most of these false signals can be detected if I use a 30 week eMA as a filter.  I apply it in this way.  When there is a Coppock signal on the monthly chart,… Continue reading

Is JBH a turn around?

The Coppock indicator is a reliable indicator for the start of a new bull market.  It was designed for use on the DOW Jones index but can be applied equally to any index.  The chart below shows the Coppock indicator applied to the ASX200   where it provided and entry signal for July of this year.

While I am skeptical of this market there does seem to be increasing cause for optimism although that optimism is very much dented by the economic news from the US, the EU and China.

 I run a Coppock scan across the stocks of the Australian market every month and it is interesting that at this time there are 52 stocks which are giving Coppock entry signals.   Some of these are interesting.  For example the monthly JB Hi Fi chart below has been in a persistent downtrend for… Continue reading

What the world indices are telling us.

A look at the major world stock indices gives a very revealing look at probable market moves over the next few months/years. For example in November 2007 virtually all of the major world indices showed a high probablilty of the end of the 5 year world bull market. This was a very definitive signal for those investors who were observant market watchers. In the ensuing bear market more than 50% was wiped off the ASX200 and this changed the retirement aspirations of millions of investors.

So what are international indices telling us now? The S&P500 index (below) is now showing a bearish RSI divergence, supported by similar patterns in the DOW and NASDAQ.


In Asia which is the most important region for future world growth, the Shanghai Composite (below) is in a long term down trend. This is significant for us because in recent years the Australian indices have been… Continue reading

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