Wednesday, May 13, 2009

The granddaddy of momentum oscillators

The Coppock indicator is the granddaddy of long-term momentum oscillators.  When it turns up from a negative reading, the stock market usually enters a bull market.  The one false signal in the postwar period was given in this decade, in 2002, but after a stutter, the market recovered and was higher three years later than at the time of the false signal.  The Coppock indicator is at its lowest level of the postwar period, but has not turned up yet.  Given the strength of the recent run-up, I’d kind of expect a stutter-step before we get Ben’s First Bubble continuing in the stock market.  The Coppock curve is below, gratis.  This is another indicator of pent-up yin-yang. Let the panic buying begin!  Just remember:  bulls make money, bears make money, pigs get slaughtered in the next down leg to new lows.

Click to enlarge.  This is research, not investment advice.  Trade at your own risk.


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