LETTERS by Technical Analysis, Inc.
COPPOCK'S ORIGINAL FORMULA
Regarding my article "The Coppock guide" in the March 1993 issue, astute technicians may have noticed
that the described formula varied somewhat from Coppock's original formula, which he explained in a
Barron's article published in October 1962.
Using Coppock's original rules, the DJIA's 14-month rate of price change is added to the DJIA's 11-month
rate of price change, and that total is then used to determine a 10-month weighted moving total. The
moving total is calculated by multiplying the sum for the most recent month by 10, the sum a month ago
by nine and so on until the sum nine months ago is multiplied by one.
In our formula, we likewise added the 14-month rate of price change to the 11-month rate of price
change. But we then determined the 10-month front-weighted moving average instead of the moving
total. We have since adjusted our formula to match Coppock's original calculation, and we have
determined that the 1.3 parameter that we had been using is the equivalent of 7.15 using the original
formula (Coppock used a zero parameter).
Our buy signals are now generated when the index is below 7.15 and rises, while our sell signals occur
when the index is above 7.15 and falls by 60.5 points (rather than 11 points using the 1.3 parameter).
All of this is pretty much academic, as the net results is a different scaling—the pattern is the same using
either method, as are the buy and sell signal dates and the resulting historical track record.
TIM HAYES Ned Davis Research Venice, FL