Coppock Curve¶
OVERVIEW¶
The Coppock Curve is a long-term momentum oscillator used to identify major market bottoms and the beginning of new bull markets. Originally developed by economist Edwin Coppock in 1962 for the S&P 500, the indicator models the psychological recovery period following a major market crash. Tapeboard surfaces the Coppock Curve as part of its macro analysis toolkit for equity index monitoring.
Note
The Coppock Curve generates buy signals only. Edwin Coppock never designed the indicator to identify market tops or produce sell signals.
FORMULA¶
The Coppock Curve combines two Rate of Change (ROC) periods smoothed by a Weighted Moving Average (WMA).
Coppock Curve = WMA(10) of [ROC(14) + ROC(11)]
| Component | Definition |
|---|---|
| ROC(n) | [(Current Price − Price n periods ago) / Price n periods ago] × 100 |
| WMA(10) | 10-period weighted moving average; most recent period carries the highest weight |
| Weighting multiplier | 10 / 55, yielding weights of 10, 9, 8, 7, 6, 5, 4, 3, 2, 1 |
| Default timeframe | Monthly closing prices |
Tip
Some traders substitute the default periods (14, 11, 10) with daily equivalents (231, 182, 210) to apply the curve to weekly or daily charts. The monthly interpretation remains the standard.
HOW TO USE¶
Reading the indicator
| Curve Value | Market Signal |
|---|---|
| Below zero | Bear market phase is active |
| Crosses from below zero to above zero | Buy signal — end of mourning period |
| Above zero | Bull market phase is active |
Step-by-step calculation
- Calculate the 14-period ROC and the 11-period ROC using monthly closing prices.
- Sum the two ROC values for the current period.
- Collect the summed ROC values for the previous nine periods.
- Multiply each value by its corresponding weight (10 for most recent, down to 1 for oldest).
- Divide the total weighted sum by 55 to produce the final curve value.
Worked example using SPX
- 14-month ROC: -8.0
- 11-month ROC: -5.0
- Summed ROC: -13.0
Previous nine monthly sums: -15.0, -16.0, -18.0, -20.0, -22.0, -24.0, -25.0, -26.0, -28.0
| Period | Sum | Weight | Weighted Value |
|---|---|---|---|
| Current | -13.0 | 10 | -130 |
| -1 month | -15.0 | 9 | -135 |
| -2 months | -16.0 | 8 | -128 |
| -3 months | -18.0 | 7 | -126 |
| -4 months | -20.0 | 6 | -120 |
| -5 months | -22.0 | 5 | -110 |
| -6 months | -24.0 | 4 | -96 |
| -7 months | -25.0 | 3 | -75 |
| -8 months | -26.0 | 2 | -52 |
| -9 months | -28.0 | 1 | -28 |
| Total | 55 | -1000 |
Coppock Curve = -1000 / 55 = -18.18
A buy signal triggers when this value rises above zero.
LIMITATIONS¶
| Limitation | Detail |
|---|---|
| Signal lag | Relies on 14- and 11-month lookbacks smoothed by a 10-month average; signals often appear months after the actual bottom |
| V-shaped recoveries | In fast-recovering markets, the buy signal may arrive after the majority of gains have already occurred |
| Buy signal only | The indicator was not designed to signal market tops or exits |
| Index-specific | Mathematically optimized for broad market indices; unreliable on individual stocks |
Note
Use the Coppock Curve alongside complementary indicators such as Rate of Change, Moving Averages, and Relative Strength to compensate for its directional and timing limitations.