Coppock CurveThe Coppock Curve was developed by Edwin Sedgwick Coppock in 1962. 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 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 Coppock Curve is calculated as an Exponential Moving Average of the Rate of Change of a Simple Moving Average of the stock concerned. The periods of each of these may be manipulated independantly.
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