Coppock Curve: a long-term bottom indicator built for grief

What it measures

The Coppock Curve adds an eleven-period and a fourteen-period rate of change, then smooths the sum with a ten-period weighted moving average.

Coppock chose those periods after asking clergy how long people take to recover from bereavement, on the theory that markets mourn losses the same way. The provenance is unusual and the indicator works anyway.

It was built for monthly charts and one purpose: identifying the bottom of a major decline.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Compute rate of change over fourteen periods.

2. 2

   Compute rate of change over eleven periods.

3. 3

   Add the two together.

4. 4

   Smooth the sum with a ten-period weighted moving average.

Settings

Eleven, fourteen and ten are original and there is little reason to change them. The meaningful decision is the timeframe: monthly is what it was designed for, weekly is defensible, anything faster is a different indicator wearing the same name.

How to read it

• The classic signal is the curve turning up from below zero, which historically marked major lows.
• A turn up from above zero is not the signal and has a much poorer record.
• The level itself is secondary; the direction change below zero is the whole indicator.
• It says nothing at all about tops, and was never intended to.
• It says nothing about how far the recovery will go or how long it will take, only that the decline has stopped accelerating. As an accumulation trigger for a long-horizon position that is enough; as a trade entry it is close to useless, because the stop would have to be enormous.
• Because it only signals from below zero, it is silent for years at a time during an ongoing bull market, and that silence is correct behaviour rather than a broken indicator.

Where it misleads

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