• 260 days Will The ECB Continue To Hike Rates?
  • 260 days Forbes: Aramco Remains Largest Company In The Middle East
  • 262 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 662 days Could Crypto Overtake Traditional Investment?
  • 666 days Americans Still Quitting Jobs At Record Pace
  • 668 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 671 days Is The Dollar Too Strong?
  • 672 days Big Tech Disappoints Investors on Earnings Calls
  • 673 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 674 days China Is Quietly Trying To Distance Itself From Russia
  • 675 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 678 days Crypto Investors Won Big In 2021
  • 679 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 680 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 682 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 682 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 685 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 686 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 686 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 688 days Are NFTs About To Take Over Gaming?
Trade In Counterfeit Goods Hits Half A Trillion Dollars

Trade In Counterfeit Goods Hits Half A Trillion Dollars

The counterfeit market has breached…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

The Transformed Coppock Curve

In my July 30, 2003 communication I presented evidence that the deep Monthly DJIA Coppock Curve buy signals of 4/28/78 and 5/30/03 are a true pattern pair, not just a pair by default. Now I would like to present evidence that the two signals do form a pattern pair merely by default; that not only are they unlike other true pattern pairs, they are also unlike each other.

The first chart shows the Monthly DJIA Coppock Curve from 10/31/60 to 5/28/04. The colored markers indicate the 8 deep buy signals which occurred within that time span. All 8 signals bear some resemblance to one another, but it is difficult to ascertain any pairing off. A more incisive way of looking at the signals is warranted.

The second chart shows a transformation of the Coppock Curve's month to month change over a similar time span. The transformation consists of plotting the month to month change's 7 month moving average (further smoothed by two 10 month moving averages) against the difference between the month to month change's 3 month moving average and its 10 month moving average (which difference is also further smoothed by two 10 month moving averages). The colored markers represent the 8 deep buy signals.

This transformed Coppock Curve travels counterclockwise, sometimes swinging widely, sometimes curling tightly, and (if visualized in three dimensions) sometimes spiraling down into a central vortex.

The next four charts show, in pairs of signals, the 31 months ending in each of the 8 buy signals.

The 8/31/70 (dark green) and 1/31/75 (red) signals are both preceded by spirals into the vortex. The 4/28/67 (periwinkle) and 10/31/88 (brown) signals are also preceded by spirals into the vortex, but which later flare out to the left. The 1/31/63 (orange) and 8/31/82 (pink) signals are preceded by flat, ordinary loops which manage to skirt the vortex. The 4/28/78 (coral) and 5/30/03 (bright green) signals behave differently from the others and from each other. The 4/28/78 signal is preceded simply by a very wide, flat loop; while the 5/30/03 signal is preceded by a gentle, rather uncertain descent into the vortex.

Meanwhile, as to what happens AFTER each signal, the following 4 charts show, in pairs of signals, the transformed Coppock Curve for the 31 months starting with each of the same 8 signals, except in the case of 5/30/03, which has only 13 observations.

It remains to be seen if the transformed Coppock Curve will unfold, post-5/30/03, in a pattern noticeably similar to that of post-4/28/78.

In light of the above, not only are the 4/28/78 and 5/30/03 buy signals unlike the other three pairs, they are unlike each other. They do not constitute a true pattern pair. If they form a pair at all, it is only by default. This evidence deserves some respect, in my opinion. So, until further notice, I will treat 4/28/78 and 5/30/03 as a pair, but only by default.

In conclusion, this evidence implies that the weak DJIA recovery which followed the 4/28/78 buy signal should not be expected to follow, ipso facto, the 5/30/03 signal. But evidence which does no more than deny the pairing does not necessarily imply an outcome different from what a true pairing would imply. In other words, there could be some other feature of the 5/30/03 signal, such as its hesitancy, which leads ultimately to an outcome similar to 4/28/78's.

PS: Note that I now use 8/31/82 as a buy signal date, rather than 9/30/82 which I erroneously used heretofore.

Back to homepage

Leave a comment

Leave a comment