Business, Legal & Accounting Glossary
The Coppock Curve was created by E.S.C. Coppock and first published in Barron’s Magazine on October 15, 1962. Coppock was an economist and founder of Trendex Research in San Antonio, Texas. The Episcopal Church asked him to identify long term buying opportunities.
Coppock equated market downturns to 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. The Coppock Curve was originally called the Trendex Model.
The Coppock Curve is used on a monthly time scale. The indicator is calculated as the sum of a 14-month rate of change and 11-month rate of change of the S&P 500 Index, smoothed by a 10-period weighted moving average.
Coppock Curve = (ROC[SPX,14] + ROC[SPX,11])Coppock CurveWMA = WMA(Coppock Curve,10)
The Coppock Curve is used to determine long term bullish trends for the S&P 500 Index. 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 buy signal is generated when the indicator is below zero and turns upwards from a trough. In its history, only 4 false signals have occurred. That’s an 83% accuracy rate. The Coppock Curve can also provide major (infrequent) bear market alerts. These occur when a double top formation occurs without coming down to the zero line.
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This glossary post was last updated: 23rd March, 2020