What is a Coppock curve?

The Coppock Curve is a long-term price momentum indicator used primarily to recognize major downturns and upturns in a stock market index. It is calculated as a 10-month weighted moving average of the sum of the 14-month rate of change and the 11-month rate of change for the index. It is also known as the "Coppock Guide."

What are the disadvantages of the Coppock curve?

False signals: One of the major drawbacks of the Coppock Curve is that it can give a false signal, but this is very common with all technical indicators. False signals can occur when the market is in a range, making the indicator to move above and below the zero level frequently.

Will the Coppock curve revert higher in February?

For this reason, it is noteworthy that the Coppock Curve broke below the zero line back in September. Moreover, it is unlikely to form a bottom and curl higher for at least a few more months. Even if the current rally were to continue higher, the Coppock Curve likely wouldn’t itself reverse higher before February.

How did the Coppock curve cross the zero line?

On the open, the ETF moved higher, and the Coppock curve crossed the zero line. This cross to the upside gave us the trigger to enter a long position at $107.61. In true morning breakout fashion, the QQQ began to trade sideways after the open, and the indicator dropped below zero. This drop below zero is our sign to exit the position at $108.20.