Chart Item

Description

Coppock Indicator

 

The Coppock indicator is a technical analysis indicator created by Edwin Coppock.

The indicator is designed for use on a monthly time scale. It's the sum of a 14-month rate of change and 11-month rate of change, smoothed by a 10-period weighted moving average.

             Coppock = WMA [10] of  (ROC [14] + ROC [11])

Coppock was an economist and 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. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.

A buy signal is generated when the indicator is below zero and turns upwards from a trough. The indicator is trend-following, and based on averages, so by its nature it doesn't pick a market bottom, but rather shows when a rally has become established.

A sell signal is generated when the indicator is above zero and turns downwards from a peak.

The indicator was not originally designed to indicate SELLs, which should be treated with caution.

Unofficial BUY signals (BUY*) are generated when there is an upturn and the indicator is above zero.

Unofficial SELL signals (SELL*) are generated when the is a downturn and the indicator is below zero.

Coppock designed the indicator for the S&P 500 index and it's been applied to similar stock indexes like the Dow Jones Industrial Average. It's not regarded as well-suited to commodity markets, since bottoms there are more rounded than the spike lows found in stocks.

Although designed for monthly use, a daily calculation over the same period can be made, converting the periods to 294 day and 231 day rate of changes, and a 210 day weighted moving average. This is the calculation used in Sharelockholmes.

 

 

Coppock BUY

Official Buy signal. The Coppock indicator is below zero and turns upwards.

 

Coppock BUY*

 

Unofficial Buy signal. The Coppock indicator is above zero and turns upwards.

Coppock SELL

Official Sell signal. The Coppock indicator is above zero and turns downwards.

 

Coppock SELL*

 

Unofficial Sell signal. The Coppock indicator is below zero and turns upwards.

Death Cross

 

A crossover involving a security's short-term moving average (such as 50-day moving average) breaking below its long-term moving average (such as 200-day moving average. The long term moving average should be flat or falling.

 

As long-term indicators carry more weight, the Golden Cross indicates a bear market on the horizon and is reinforced by high trading volumes. Additionally, the long-term moving average becomes the new resistance level in the rising market.

Technicians might see this cross as a sign that the market has turned against the stock.

 

The Death Cross used in Sharelockholmes is based on the 50 day and 200 day weighted moving average..

Golden Cross

A crossover involving a security's short-term moving average (such as 50-day moving average) breaking above its long-term moving average (such as 200-day moving average. The long term moving average should be flat or rising.

 

As long-term indicators carry more weight, the Golden Cross indicates a bull market on the horizon and is reinforced by high trading volumes. Additionally, the long-term moving average becomes the new support level in the rising market.

Technicians might see this cross as a sign that the market has turned in favor of the stock.

 

The Golden Cross used in Sharelockholmes is based on the 50 day and 200 day weighted moving average.

200 Day MA Bottom

Shows a reversal in the 200 day moving average, which was declining, but is now rising.

 

200 Day MA Top

Shows a reversal in the 200 day moving average, which was rising, but is now declining.