Trading Reference Links
>From the EQUIS website, surprised you missed it:
The Coppock Curve was developed by Edwin Sedgwick Coppock in 1962. It was
featured in the November 94 issue of Technical Analysis of Stocks &
Commodities, in the article "The Coppock Curve", written by Elliot
Taken from Stocks & Commodities, V. 12:11 (459-462): The Coppock Curve by
"We are creatures of habit. We judge the world relative to what we have
experienced. If we're shopping for a mortgage and rates have been in the
teens (as they were in the early 1980s) and then drop to 10%, we are elated.
If, however, they've been at 8% and then rise to 10%, we are disappointed.
It all depends on your perspective.
The principle of adaptation-level applies to how we judge our income levels,
stock prices and virtually every other variable in our lives.
Psychologically, relativity prevails..
The moving average is the simplest form of adaptation-level. Moving average
crossover rules accurately signal the onset of periods of returns outside
the norm, whether positive or negative. This makes moving average crossovers
useful to traders who want to get a boost on entering or exiting stocks or
The oscillator is also based on adaptation-level, although in a slightly
different way. Oscillators generally begin by calculating a percentage
change of current price from some previous price, where the previous price
is the adaptation-level or reference point. The mind is attuned to
percentage changes because they represent returns. If you bought Microsoft
Corp. stock (MSFT) at $50 and it goes to $80, you make 60% before dividends.
If you bought Berkshire Hathaway (BRK) at $4,000 and it rises to $4,030, the
same dollar gain, you make 0.75% before dividends. It's the percentage
change that counts. Relativity again.
Coppock reasoned that the market's emotional state could be determined by
adding up the percentage changes over the recent past to get a sense of the
market's momentum (and oscillators are generally momentum indicators ). So
if we compare prices relative to a year ago - which happens to be the most
common interval - and we see that this month the market is up 15% over a
year ago, last month it was up 12.5% over a year ago, and 10%, 7.5% and 5%,
respectively, the months before that, then we may judge that the market is
gaining momentum and, like a trader watching for the upward crossover of the
moving average, we may jump into the market."
The MetaStockô formula for the Coppock Curve is:
From: Greatelto <Greatelto@xxxxxxx>
To: metastock-list@xxxxxxxxxxxxx <metastock-list@xxxxxxxxxxxxx>
Date: Thursday, December 11, 1997 10:08 PM
Subject: Momentum Index
>Has anybody heard of or know where to find info on the Coppock Curve? I
>understand it is a momentum index based on a combination of two rate of
>measures and has a very good record of identifying bottoms and new advance
>phases when the index itself moves from an oversold condition. It recently
>did just that, suggesting strength into the year end and early 1998.
>If anyone can help, please advise. Thanks....