The Coppock Breadth Indicator, originally known as Trendex's Timing Technique for Texas Traders, is used to identify buy signals from around the bottom of a bear market. It was first developed in 1945 when church authorities asked Edwin Sedgewick Coppock for a low-risk, long-term signal for use on the Dow. Coppock believed that, in the markets, collective emotion outweighed collective reason and investors panic-sold to avoid losses. He asked the bishops how long it took to recover from bereavement or similar trauma. They said between 11 and 14 months, so using the Coppock Breadth Indicator he would judge the momentum of the markets based on the average of their 11 and 14-month rates of change. By adding up the percentage changes, relative to those intervals, a picture emerges of when those who had their fingers burned might be brave enough to dip them back in again. It is excellent when used for predicting upturns, but is less successful at predicting downturns.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Review: Eden Roc Cap Cana – fun, sun and golf in the CaribbeanTravel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course
-
Reeves delays cash ISA reform, but savers are not out of the woods yetThe chancellor has reportedly delayed plans to cut the cash ISA limit, which were set to be announced at Mansion House on 15 July, and will take more time to consult with the industry
