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Hi Tony! A momentum thing....but it's weekly. For me, it's buy the dips. It's faster. You're waiting too long for a buy signal. What they talked about was a time when rates were going down (most timeframes). While I like charts, it's not my strong point. Is there a new bull run coming? For me, I think not. Again, too many sectors are lagging....strong dollar.....rates going up. That does not mean new highs. No, not at all. It's the time of year for this. The dollar and rate hikes are the keys in my mind (how many hikes). God bless. the Pudd p.s. Good stuff, Tony! I like this. Good stuff to think about.
First, I cannot see it on StockCharts.com. So they want money I guess. Second, how about it has to drop below -12.0% and not -12.5% and then cross -1.0% instead of 0%? So it has to drop below -12.5% because that's how much it happened to drop in the recent selling. Just look at the charts. They had to pick some drop. The earlier times it had dropped much more. If the drop was supposed to be -20% then one would have held on all this time. On top of that, there is disclaimer as well.
I've to figure out how to get it free. Just like Fooly Owly Signal, I will then start posting a PeaCock signal.
I'm thinking that the market, in general, is currently too richely priced, for me, to be adding to long term positions. If anything, open special investment positions by buying the dips and selling the rips ... and, then repeat again. Should P/E Ratios return to a more normal range then I might consider increasing my equity allocation towards its upper range within my asset allocation. Until then, I am staying cash heavy not equity heavy.
As investors we all get to choose our own poison. Although I was once an advocate of technical indicators to signal market positions, I no longer promote that discipline. However, in no way do I recommend that others abandon that methodology. As I said, we get to choose our own poison
Some very solid investment firms do subscribe to technical analyses. Jim Stack of InvestTech is one such individual. Here is a Link to an older Stack paper that discusses the Coppock methodology:
As you see from the first reference, Stack is not a slave to a single signal generator. Reliability is an issue, so Stack assesses a number of indicators before formulating a composite investment opinion. Many other professions do the same.
I don’t like the Coppock Curve. My dislike is not based on its prediction record. It is mostly based on its historical logic and on its arbitrary number of open parameters.
From Wikipedia: ”Coppock was an economist. He had been asked by the Episcopal Church to identify buying opportunities for long-term investors. He thought market downturns were like bereavements and required a period of mourning. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.” That is definitely not the scientific basis for formulating any predictive investment tool.
Not only are the 11 and 14 month time periods arbitrary, so is the 10 month moving average of their summation. In its original format, the threshold signal was generated when the Coppock’s evaluation changed sign or direction. More recently, other threshold crossing points are used for either the buy or sell signals.
In its original form, the various inputs are based on monthly data. That tends to be too long a time period for some active investors, so one variant of the Coppock Curve uses weekly changes as input. Studies show that as the time span is shortened, the accuracy of the Coppock signal degrades.
With all these variants, over-curve fitting is a likely result. Given the number of variables, the method can be force-fit to show some successes. It will succeed until it fails, and some technical analyst will revise it accordingly. I pass on this as a reliable market direction indicator. I still like Jim Stack as a market forecaster.
If you like the Coppock Curve as a market turn-around signal generator, you might want to consider the Hindenburg Omen as yet another market movement indicator.
The Omen has at its roots in the Norm Fosback High Low Logic Index (HLLI). At least that indicator is based on market high-low data. The value of the HLLI is the lesser of the NYSE new highs or new lows divided by the number of NYSE issues traded. It smoothes the data by using an exponential moving average. I don’t like that indicator either.
As I said in my opening, these are my personal biases. You get to choose your own. Regardless of your selections, good luck.
The problem with a "gauge" type measurement of this sort, is that: 1) It is difficult to generate alpha across long sample sizes from a discrete indicator ( such as it is through the use of a basic long length moving average of price vs. crossing heuristic ) 2) the signaling is ambiguous ( we have to check it frequently to know what the reading? is and 2) it is calculated using an indicator (Rate of Change) that already has a "lag" against pure index price movement and hence, adds more long moving averages to get further "behind" pure price movement. Because of the "lags" created, how do we define how to allocate differently using the "first" peak versus a "second" ? Or a cross below "0" in combination with the "peaks")? We don't. As the performance via the use of the pure/basic "0" line cross heuristic basically ties buy and hold, additional subjective means come into play ( using the peaks ) and developing buy and sell heuristics become muddled and confused.
A better method for alleviating ambiguous decision making towards asset allocation is to design the model with "clear cut", objective signaling heuristics. With our model, 80% of the signalling falls on four predetermined and fixed dates ( in either February, July, October, or last trading day of year ) and clearly definable investment periods - with "0%" or "100%" allocation defined. The other 20% are clearly and mechanically signaled with definable, two stage 50%, straight 100% equity allocation entries. Much of the time, we know in advance what to expect; not necessarily "forecasting" how much the market will rally or the decline ( no one can quantify that ! ), but with an assurance in following the "plan" towards long term asset accumulation and risk mitigated alpha" premium. https://stockmarketmap.wordpress.com/2015/11/14/market-map-model-tactical-asset-allocation-using-low-expense-index-etfs-2015/ cash since predefined date 01/20/2015 https://stockmarketmap.wordpress.com/2015/01/19/market-map-allocates-to-cash/
MJG Coppock comments are interesting. I also went and reread Stack MW articles from earlier this year: no panning-out yet. The '07 Stack paper is prescient and insightful about housing, but the fall '13 article turns out to have been unwarranted in hindsight (20-20), given the +25% SP500 rise since then.
Comments
A momentum thing....but it's weekly. For me, it's buy the dips. It's faster. You're waiting too long for a buy signal. What they talked about was a time when rates were going down (most timeframes). While I like charts, it's not my strong point. Is there a new bull run coming? For me, I think not. Again, too many sectors are lagging....strong dollar.....rates going up. That does not mean new highs. No, not at all. It's the time of year for this. The dollar and rate hikes are the keys in my mind (how many hikes).
God bless.
the Pudd
p.s. Good stuff, Tony! I like this. Good stuff to think about.
Second, how about it has to drop below -12.0% and not -12.5% and then cross -1.0% instead of 0%? So it has to drop below -12.5% because that's how much it happened to drop in the recent selling. Just look at the charts. They had to pick some drop. The earlier times it had dropped much more. If the drop was supposed to be -20% then one would have held on all this time. On top of that, there is disclaimer as well.
I've to figure out how to get it free. Just like Fooly Owly Signal, I will then start posting a PeaCock signal.
Ridiculous.
As investors we all get to choose our own poison. Although I was once an advocate of technical indicators to signal market positions, I no longer promote that discipline. However, in no way do I recommend that others abandon that methodology. As I said, we get to choose our own poison
Some very solid investment firms do subscribe to technical analyses. Jim Stack of InvestTech is one such individual. Here is a Link to an older Stack paper that discusses the Coppock methodology:
https://www.investech.com/pdfs/V07I08.pdf
Here is a reference to a more recent Stack presentation of the Coppock signal:
http://www.moneyshow.com/articles.asp?aid=guru-32891
As you see from the first reference, Stack is not a slave to a single signal generator. Reliability is an issue, so Stack assesses a number of indicators before formulating a composite investment opinion. Many other professions do the same.
I don’t like the Coppock Curve. My dislike is not based on its prediction record. It is mostly based on its historical logic and on its arbitrary number of open parameters.
From Wikipedia: ”Coppock was an economist. He had been asked by the Episcopal Church to identify buying opportunities for long-term investors. He thought market downturns were like bereavements and required a period of mourning. He asked the church bishops how long that normally took for people, their answer was 11 to 14 months and so he used those periods in his calculation.” That is definitely not the scientific basis for formulating any predictive investment tool.
Not only are the 11 and 14 month time periods arbitrary, so is the 10 month moving average of their summation. In its original format, the threshold signal was generated when the Coppock’s evaluation changed sign or direction. More recently, other threshold crossing points are used for either the buy or sell signals.
In its original form, the various inputs are based on monthly data. That tends to be too long a time period for some active investors, so one variant of the Coppock Curve uses weekly changes as input. Studies show that as the time span is shortened, the accuracy of the Coppock signal degrades.
With all these variants, over-curve fitting is a likely result. Given the number of variables, the method can be force-fit to show some successes. It will succeed until it fails, and some technical analyst will revise it accordingly. I pass on this as a reliable market direction indicator. I still like Jim Stack as a market forecaster.
If you like the Coppock Curve as a market turn-around signal generator, you might want to consider the Hindenburg Omen as yet another market movement indicator.
The Omen has at its roots in the Norm Fosback High Low Logic Index (HLLI). At least that indicator is based on market high-low data. The value of the HLLI is the lesser of the NYSE new highs or new lows divided by the number of NYSE issues traded. It smoothes the data by using an exponential moving average. I don’t like that indicator either.
As I said in my opening, these are my personal biases. You get to choose your own. Regardless of your selections, good luck.
Best Wishes.
A better method for alleviating ambiguous decision making towards asset allocation is to design the model with "clear cut", objective signaling heuristics. With our model, 80% of the signalling falls on four predetermined and fixed dates ( in either February, July, October, or last trading day of year ) and clearly definable investment periods - with "0%" or "100%" allocation defined. The other 20% are clearly and mechanically signaled with definable, two stage 50%, straight 100% equity allocation entries.
Much of the time, we know in advance what to expect; not necessarily "forecasting" how much the market will rally or the decline ( no one can quantify that ! ), but with an assurance in following the "plan" towards long term asset accumulation and risk mitigated alpha" premium. https://stockmarketmap.wordpress.com/2015/11/14/market-map-model-tactical-asset-allocation-using-low-expense-index-etfs-2015/
cash since predefined date 01/20/2015 https://stockmarketmap.wordpress.com/2015/01/19/market-map-allocates-to-cash/