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Coppock Market Message: Get Out And Stay Out - Check Back In Q1 2015

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This chart's value is in posing an if-then question: if today's S&P 500 follows these patterns, what will our reaction be?

Longtime contributor B.C. recently submitted a chart that combines two interesting market tools: the Coppock Curve and historical analogies. Coppock called his technical invention the Very Long Term (VLT) Momentum indicator, and the so-called "killer wave" is a top followed by a second lower peak.

This chart shows the Coppock Curve for the S&P 500, overlaid against previous deflationary secular Bear Markets in the late 1800s, the U.S market in the 1920s and 30s and the Japanese Nikkei stock market index from 1986 to the present.



I have added notes to the chart to mark the potential market bottom in early 2015 and a possible peak in Fall 2016. I also added a note that suggests the shallow troughs in 2005 and 2011 were the result of unprecedented financial engineering by central banks: financial authorities have been dead-set on limiting market declines and "buying time" so the broken parasitic financial system could feed off the real economy long enough to restore its viability.

If any indicator issued to-the-day signals that worked 100% of the time, everyone would follow the signal and it would lose its predictability. As a result, any signal--and any historical analogy--is simply one possibility of many.
This chart's value is in posing an if-then question: if today's S&P 500 follows these patterns, what will our reaction be?

Economist Steen Jakobsen has opined that the S&P 500 is due for a 30% decline with a bottom in late 2014 or early 2015. This aligns rather neatly with the Coppock Curve's implied bottom.

At last week's Wine Country Conference, Jakobsen reported that his models suggest a rally is likely from the low in early 2015 up to the election in 2016. That also aligns with the implied peak in the Coppock Curve.

On the other hand, the market could tumble 30% and stumble along at that level for months. Or the market could drop 30%, stabilize for a time, and then take another leg down.

All we can do is remain alert for possibilities and probabilities, i.e. ask what is likely. The conventional consensus is that the Fed's liquidity will keep the market wafting higher, along with corporate profits, if not forever, then close enough to forever that there is nothing to worry about.

Skeptics see vulnerabilities galore, starting with the consensus being so one-sided. When everyone's on one side of the trade, it doesn't take much of a wave of volatility to swamp the boat and send it to the bottom.

The Coppock Curve's message is straightforward: get out of the market and stay out until at least the first quarter of 2015. After five years of upside, the old trading saw comes to mind: bulls make money, bears make money, but pigs get slaughtered.

 

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Mon, 05/05/2014 - 12:47 | 4728669 LawsofPhysics
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Somebody's short.  Well, my condolences...

 

Mon, 05/05/2014 - 12:50 | 4728686 Soul Glow
Soul Glow's picture

Stocks have topped.  The correction will be short and swift.  The crash will be long and drawn out.  Good luck trading.

Mon, 05/05/2014 - 12:59 | 4728720 LawsofPhysics
LawsofPhysics's picture

Took profits, it's a busy summer.  Have numerous physical assets and a very dependable tribe.

"Good luck gambling" - Fixed, and no thanks.

Mon, 05/05/2014 - 13:03 | 4728735 Soul Glow
Soul Glow's picture

We appear to be in the same boat.  Time to row hard.

Tue, 05/06/2014 - 09:46 | 4731588 spine001
spine001's picture

No historical analysis is relevant as a predictor of the  timing of the coming crash. Furthermore, the crash could be a dow falling to 100,000, from 200,000, with the dollar index at 0.001 and gold at 1,000,000 per ounce. I dont know this, it's only an illustration of what could happen. Remember in recent history when Argentina lost control of their currency value, its value dropped 10000000000000 times in a decade. And the peso was not a reference currency. For the dollar, it could be much worse. 

My main point is that nobody, nobody knows what is coming or when it will come. I only hope for a blue waters scenario.

Mon, 05/05/2014 - 13:00 | 4728725 Headbanger
Headbanger's picture

I think defense stocks have a ways to go up now.

Mon, 05/05/2014 - 13:04 | 4728742 Soul Glow
Soul Glow's picture

Nope.  Wrong trade.  Remember, don't watch the magicians hand that is in your face.

Mon, 05/05/2014 - 16:11 | 4729480 Lewshine
Lewshine's picture

Bullshit!! I saw the Fed's handywork in 2008 when the Dow dropped 1000 points in 1/2 hour...Then rebounded 1200 in the next 5 minutes. You boyscouts think that actual dollars play a part in this chirade. That's where you would be very wrong!! The equity market is cinched (all the indexes) to targeted algo programs that improvise or immulate actual buy/sell orders - but are NOT. No dollars change hands when these support programs kick-in. There's no real buying and selling. You think the Fed would risk 5 years of manipulation on a real threat of a market collapse - that could happen in an hour?? Get real. You saw it this morning. Dow is down 135 with heavy selling, abruptly interrupted by a screaming catapult rocket shot...Oh yeah, that was 50 corporations and 5 of the biggest banks hitting the BUY button simultaneously!!! BWHAAHAHHHHAHAHAHAHAHA!!!!

Mon, 05/05/2014 - 12:49 | 4728675 Manthong
Manthong's picture

"Pull out? That doesn't sound manly to me."

-G Carlin

Mon, 05/05/2014 - 12:49 | 4728676 buzzsaw99
buzzsaw99's picture

yeah, right. lulz

Mon, 05/05/2014 - 12:49 | 4728677 Soul Glow
Soul Glow's picture

European equity markets and the US equity market look bad today.

Mon, 05/05/2014 - 12:52 | 4728695 SheepDog-One
SheepDog-One's picture

So fuckin bad....DOW -1 point.

Mon, 05/05/2014 - 13:00 | 4728724 Soul Glow
Soul Glow's picture

You know as well as anyone else the President's Working Group - through POMO and other various market operatins - are in the market.  So ask yourself, 'How come they haven't pushed stocks to real new highs?'  Let's not use nominal stats, let's remember they have burned trillions of dollars to get to this point and this has created massive inflation.  So in real terms - that using inflation - what is the DOw at?

16k?  Nope.  12k?  Maybe.  More like 10k.  

And if you can't understand that sell your stocks today and go buy food and gas, prep, and stock up.  How much did you get with your stocks?  How much are your dollars buying?

So telling me that the DOw is down one point is pointless.  Also, if you look at the patterns the charts are forming you can see a top and a reversion to the mean coming.  Of course Yellen will just print more, yadda yadda.....

Mon, 05/05/2014 - 13:05 | 4728750 Winston Churchill
Winston Churchill's picture

Its all about the return of capital now.
When this turns it will be no bid.

Mon, 05/05/2014 - 13:15 | 4728777 Soul Glow
Soul Glow's picture

It is all about the preservation of capital now.  And now has been going on for decades.  Unless you are the saviest of day traders - which a latest ZH article shows there really isn't any that can trade year over year accurately - you've pumped and then dumped.  Preservation of capital trumps return because it lasts.  Still holding silver?  You preserved your investment based on ounces, nevermind dollars.  You went short equity in 2011?  You are long now?  You've held bonds that have been hammered by inflation?  No one is trading properly right now.  Confusion runs Wall Street.  That and big tittied hookers getting paid with maxed out credit cards.

Mon, 05/05/2014 - 13:34 | 4728844 Winston Churchill
Winston Churchill's picture

Invested in Gold,silver, brass and food/water.
A pile of cash in assorted currencies, just in case of deflation as a backup.
I'm as liquid as you can get right now, been getting that way for a year.All except but 247 GBP left in the market.

Mon, 05/05/2014 - 12:51 | 4728693 rsnoble
rsnoble's picture

Generally it's been my exp that once everyone catches on to a long term trend it changes.

I suspect the FEDs have this chart as well. More digital zeros NOW!!!! LOL.

Mon, 05/05/2014 - 12:54 | 4728705 SheepDog-One
SheepDog-One's picture

Check back by around 2015, then things will be much safer than now. Damn these guys are smokin the good shit. Wake me when these clownshow markets dip even -5%.

Mon, 05/05/2014 - 13:01 | 4728729 Soul Glow
Soul Glow's picture

Funny how I told you stocks would rise but you didn't think so.  Now they're going to crash and you are standing at the top of the wave.  You aren't a trader, SheepDog, so don't talk like one.  Stick to prepping and shooting guns, and I'm not insulting you.  If there were more people like you the world would be better off.

Mon, 05/05/2014 - 13:06 | 4728751 buzzsaw99
buzzsaw99's picture

<-- Now they're going to crash...

<-- omg lololololololololol!!!

Mon, 05/05/2014 - 13:09 | 4728757 Soul Glow
Soul Glow's picture

Buzzsaw, wake the fuck up.

Mon, 05/05/2014 - 13:09 | 4728759 SheepDog-One
SheepDog-One's picture

Go soak your head in Epsom salts soul glow.

Mon, 05/05/2014 - 13:16 | 4728784 Soul Glow
Soul Glow's picture

You were the one on ZH two years ago saying stocks couldn't go any higher!  You flip flop like John Kerry at a horse race.  Get the fuck of the porch Space Monkey.

Mon, 05/05/2014 - 13:41 | 4728868 SheepDog-One
SheepDog-One's picture

I never said "stawks will never go any higher' liar.

Mon, 05/05/2014 - 13:58 | 4728936 SheepDog-One
SheepDog-One's picture

20 week member talking about 2 years ago? Whatever troll.

Mon, 05/05/2014 - 15:07 | 4729223 oklaboy
oklaboy's picture

SD1 you can tell he a newbie.... 

Mon, 05/05/2014 - 13:46 | 4728891 Xanthias
Xanthias's picture

classic rising wedge on ES

Mon, 05/05/2014 - 12:55 | 4728706 Dr. Engali
Dr. Engali's picture

Technical indicators in a rigged market..... LOL

Mon, 05/05/2014 - 13:10 | 4728762 Mi Naem
Mi Naem's picture

Yep, I've been readin about another imminent crash, "the big reset this time", that will come aaaaaany minute here for years. 

Surely that will come eventually.  Maybe they'll be right this time.  But, those printing pressers at the Fed have been way more resilient than most anyone here would have guessed. 

Mon, 05/05/2014 - 12:59 | 4728718 fonzannoon
fonzannoon's picture

did everyone load up on argentenian bawnds today?

Mon, 05/05/2014 - 13:01 | 4728728 LawsofPhysics
LawsofPhysics's picture

Yes, yet another safe haven...

Mon, 05/05/2014 - 13:05 | 4728743 SheepDog-One
SheepDog-One's picture

I gots to have moar bawnds!

Mon, 05/05/2014 - 13:05 | 4728746 Fuh Querada
Fuh Querada's picture

but it's going to get worse before it gets better, even though they have these g i g a n t i c hydrocarbon deposits.

Mon, 05/05/2014 - 13:03 | 4728738 Fuh Querada
Fuh Querada's picture

I' m monitoring my proprietary PoppyCock indicator, which is the 133 day exponential moving average multiplied by the quotient of the RSI and the dumb money indicator raised to the power of the Yellen "C" oscillator. When that penetrates the lower Bollinger band, which is imminent, then look out below.

Mon, 05/05/2014 - 13:06 | 4728752 SheepDog-One
SheepDog-One's picture

The FullRetard-ometer is pegged, but the Fed is creating one that goes to 11.

Mon, 05/05/2014 - 13:07 | 4728745 Soul Glow
Soul Glow's picture

STOCKS CRASHING.  You may not see it, but they are.  Welcome to the REAL.

Mon, 05/05/2014 - 13:17 | 4728783 Dr. Engali
Dr. Engali's picture

It is impressive how they have been able to conceal the fact that certain segments of the market are crasshing

Mon, 05/05/2014 - 13:21 | 4728796 Soul Glow
Soul Glow's picture

Media circus, keep up with the Joneses - "We're fine!  Look!  We bought a new boat!"  Nevermind how maxed out credit is.  "I own my own house!"  Good luck paying 30 years of mortgage payments when UE is steadily rising, because if you miss one payment the bank that has the deed - whether they do or not is not in question, thanks Linda! - will forclose you so quick your life as you know it will be over.  The American Dream is Over! 

BUY SILVER!

Mon, 05/05/2014 - 13:07 | 4728755 Eyeroller
Eyeroller's picture

Does anyone remember back in March when it was reported an anonymous individual had put several millions on the line with regard to the VIX soaring in May?

Mon, 05/05/2014 - 13:14 | 4728770 Fuh Querada
Fuh Querada's picture

same source who said Soros was buying Gold Miners

Mon, 05/05/2014 - 13:09 | 4728758 Spungo
Spungo's picture

Harry Dent predicts deflation, so I'm going all in on bonds!

Impossibly high debt burden usually leads to deflation, right guys?

Mon, 05/05/2014 - 13:12 | 4728767 PlusTic
PlusTic's picture

It's all just poppycock!

Mon, 05/05/2014 - 13:19 | 4728775 ThisIsBob
ThisIsBob's picture

Is it really, really TEOTWAWKI this time Chicken Little?

Mon, 05/05/2014 - 16:00 | 4729441 doggings
doggings's picture

..one of these days when everyone finally gives up on the idea it could ever happen, it will be..

Mon, 05/05/2014 - 13:19 | 4728797 Rising Sun
Rising Sun's picture

just another technical analysis rant

 

when Yellen stops printing, markets may pull back

 

pomo is now at a mere $45B LEVERAGED per month.

 

the Fed lets the market tank for an hour and then rushes back in with a flurry of buying, trapping bears and taking us to new highs

 

this will end eventually, but the damage caused and the damage to follow will be enormous

Mon, 05/05/2014 - 13:30 | 4728804 Soul Glow
Soul Glow's picture

DIMINISHING RETURN, BITCHEZ

Mon, 05/05/2014 - 13:19 | 4728799 ejmoosa
ejmoosa's picture

I already have friends that have forgotten how fast the markets fell in 2008....  

 

 

Mon, 05/05/2014 - 13:20 | 4728802 The_Peeper
The_Peeper's picture

Does this mean Coppock's shaking the tree so scoop up cheap shares?

Mon, 05/05/2014 - 13:21 | 4728816 lasvegaspersona
lasvegaspersona's picture

but Tuesdays are still OK right?

Mon, 05/05/2014 - 13:37 | 4728857 Al Huxley
Al Huxley's picture

No POMO tomorrow, so maybe this week not so much, but generally, I'd have to say yeah, if its Tuesday, long S&P and short Gold Miners.

Mon, 05/05/2014 - 13:39 | 4728863 Seize Mars
Seize Mars's picture

I thought the article was discussing the Chet Coppock indicator.

Mon, 05/05/2014 - 13:41 | 4728869 Herdee
Herdee's picture

Have the banksters sucked-in the last of mom & pop's money to finally wipe them out once and for all?OK then,it's time to drop it hard.

Mon, 05/05/2014 - 13:48 | 4728897 ebworthen
ebworthen's picture

S&P 666 true valuation is my indicator.

Mon, 05/05/2014 - 14:01 | 4728951 Species8472
Species8472's picture

The Coppock curve tells you whren to buy, it does not tell when to sell.

Mon, 05/05/2014 - 15:33 | 4729350 Seize Mars
Seize Mars's picture

Well, if the 14-day line would have crossed over the 11-day line one day sooner, I'd have been all in, but then I said fuck it.

WTF.

There are no "analyses," statistical or otherwise, that have merit when the whole thing us a MADE UP SHIT SHOW.
It's fucking RIGGED.

Get it?

Mon, 05/05/2014 - 15:59 | 4729436 assistedliving
assistedliving's picture

of he called it the COSSACK market message i might pay attention

Mon, 05/05/2014 - 17:17 | 4729740 elwind45
elwind45's picture

A lot more singles and doubles your point?

Mon, 05/05/2014 - 17:45 | 4729842 elwind45
elwind45's picture

I need a bigger third leg too!

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