The data wrangler, Nick Laird from Sharelynx, sent these long term technical charts of gold in US dollars with a note saying, “I like the look of it Jess. It’s a deep cyclical indicator and you can see from it’s past performance how it works for gold.” I have to admit that this is one indicator I am not given to using, probably since I rarely was a long term investor in the past, and this is a cyclical tool although certain chart functions will allow you to utilize it on shorter term charts, and probably incorrectly based on Coppock’s intent. It is an indicator that generates only buy signals by attempting to identify market bottoms after serious declines. The indicator must turn negativeinto a trough. That implies that it had previously been positive. And then it must begin an upturn and sustain it. So if I am reading these charts correctly, the last buy signal we have had was in 2001 with a big bottom buy signal forming in 1998-99. See what I mean about longer term? For a trader, that is glacial.
This post was published at Jesses Crossroads Cafe on 29 AUGUST 2014.