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All,
I took the following text from the Equis web-page:
<snip>
The oscillator is also based on adaptation-level, although in a
slightly different way. Oscillators generally begin by calculating a
percentage change of current price from some previous price, where the
previous price is the adaptation-level or reference point. The mind is
attuned to percentage changes because they represent returns. If you
bought Microsoft Corp. stock (MSFT) at $50 and it goes to $80, you
make 60% before dividends. If you bought Berkshire Hathaway (BRK) at
$4,000 and it rises to $4,030, the same dollar gain, you make 0.75%
before dividends. It's the percentage change that counts. Relativity
again.
Coppock reasoned that the market's emotional state could be determined
by adding up the percentage changes over the recent past to get a
sense of the market's momentum (and oscillators are generally
momentum indicators ). So if we compare prices relative to a year
ago - which happens to be the most common interval - and we see that
this month the market is up 15% over a year ago, last month it was up
12.5% over a year ago, and 10%, 7.5% and 5%, respectively, the months
before that, then we may judge that the market is gaining momentum
and, like a trader watching for the upward crossover of the moving
average, we may jump into the market."
The MetaStock™ formula for the Coppock Curve is:
(MOV(ROC(MOV(C,22,S),250,%),150,E))/100
<snip>
While I can accept the idea behind, I wonder if comparing years is
still
a valid approach for fast changing high-techs - can someone please
elaborate on that? I am especially curious, if Coppock can be regarded
as a long-term indicator, valid for defining entry/exit-points. Can
coppock be regarded as an "adaptive support/resistance-line"?
Kind regards from Germany,
Andreas
N.B. Please accept my excuses for extensively quoting from a probably
well known text.
---
Andreas Grau
Reality is an illusion - Perception is what counts
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