Friday was the end of the month which means we can now review the Coppock Curve (also know as the Coppock Index) to determine if the direction for stocks is indicated to be moving higher overall. Since the last bottom in the Coppock Curve back in April the index has had the following monthly figures:
- April 2009:-388
- May 2009:-383
- June 2009:-378
- July 2009: -359
From what I can tell we need another 3 months of rising numbers along with an increase above -260 for the Coppock Curve to establish a clear signal that a sustainable market reversal is at hand. I know that asking for 3 more months of rising figures seems like a lot. However, I just don't want to get faked out like what occurred in May of 2002. The actual turn in the index took place in March of 2003, almost a full year later. Would I be missing a lot of market "action" by taking this stance? Absolutely. However, the risk to your hard earned principal is what is at stake. It is always best to take the cautious stance on these matters.
Remember, The Coppock Curve is a relative strength index. In almost every instance that this index rises from a negative number to a positive number it has coincided with a relatively risk-free time to invest in stocks. In turn, an improvement in the stock market is a reflection of the better times in the U.S. economy overall. Let us hope that the trend continues.
Disclosure: No positions