Coppock Indicator

[Leth]

Coppock Indicator

Edwin Coppock developed the Coppock Indicator with one sole purpose: to identify the commencement of bull markets. The indicator was devised for use on the Dow Jones Industrial Average but is suitable for use on other market indices or averages.

Although often late, the Coppock Indicator has produced very reliable signals in the past.

Example

djia%20coppock%20monthly.png

Trading Signals

A bull market is signaled when the Coppock Indicator turns up from below zero.

Construction

To calculate the Coppock Indicator:

Calculate 14 month Rate of Change (Price) for the index. Use monthly closing price.

Calculate 11 month Rate of Change (Price) for the index. Use monthly closing price.

Add the results of 1 and 2.

Calculate a 10 month weighted moving average of the result.
There are a number of variations in calculation. For a more timely signal, try substituting the daily equivalent in place of monthly figures: 294 day ROC, 231 day ROC and 210 day weighted moving averages.

Setup

The default indicator settings are given above.