James Jim Stack: InvesTech Market Analyst & Mutual Fund Advisor
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» Kirk - Buy signal from an obscure indicator
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Buy signal from an obscure indicator
Highly respected Coppock Curve turns bullish
By Mark Hulbert, CBS.MarketWatch.com
Last Update: 12:09 AM ET May 14, 2003
ANNANDALE, Va. (CBS.MW) -- News Flash: The Coppock Curve has turned bullish.
What the heck is the Coppock Curve, you might ask?
And why should you pay it any attention?
The Coppock Curve, also known as the Coppock Guide, is a market-timing indicator named for Edwin Coppock. He introduced this indicator that now bears his name in an article for Barron's in 1962.
Though the Coppock Curve is not widely known among individual investors, it is highly respected by the cognoscenti. Coppock himself was given a lifetime achievement award by the Market Technicians Association in 1989.
In essence, the Coppock Curve is a momentum indicator that filters out shorter-term market swings in order to focus on the market's long-term trend. Its calculation and interpretation involves a number of steps:
One adviser who places great weight on the Coppock Curve is Jim Stack, who edits InvesTech Market Analyst and InvesTech Mutual Fund Advisor. According to Stack's research, "virtually every major buying opportunity of the past 82 years has been confirmed when this [Coppock] Guide turns upward after declining to or below '0', with false signals occurring only in 1938, 1941, 1947 and 2001."
The presence of these false signals means, of course, that the Coppock Curve's recent upward turn is not a guarantee of a bull market. But Stack nevertheless is convinced that its recent buy signal is genuine, since it comes in the wake of "the second most negative (oversold) level in 60 years."
To be sure, the Coppock Curve is not the only market-timing indicator on which Stack relies. But in large part because of it, Stack is now recommending that subscribers allocate 70% to 75% of their portfolios to stocks, one of the highest percentages he has recommended in years.
Though Coppock's indicator does not tell us which stocks or market sectors will be the best performers, Stack has been buying what he believes are more conservative stocks. Here are the six stocks that Stack has purchased since the Coppock Curve turned bullish:
Automatic Data Processing (ADP: news, chart, profile)
Equitable Resources (EQT: news, chart, profile)
Denstply International (XRAY: news, chart, profile)
Michaels Stores (MIK: news, chart, profile)
State Street Corp (STT: news, chart, profile)
Wilmington Trust (WL: news, chart, profile)
Editor's note: The May edition of the Hulbert Financial Digest is now available by either e-mail or regular mail. Highlights this month include:
-- Right before the Iraqi war, the best performing newsletters were "cautiously bullish." Since then, the Dow has risen 14 percent. So what are they saying now?
-- Profiles of Bob Brinker's Marketimer, The Dines Letter, Dow Theory Forecasts, No-Load Mutual Fund Selections & Timing
-- Complete performance scorecard, and more
For more information or to subscribe to the Hulbert Financial Digest, click here.http://cbs.marketwatch.com/news/newslett...
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
Kirk's Newsletter performance vs the S&P500
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