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IC/Coppock: Sell, sell, sell

Created:
6 September 2007
Updated:
4 October 2007
Written by:
Robert Ansted

The "sell" signals produced by the FT 30 Industrial Ordinary and the one for the Republic of Ireland in July certainly turned out to be the outriders to the pack. The fall in global indices in July/August caused another 11 of our indicators to change direction and produce "sell" signals in August.

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Stockmarkets around the world suffered their worst one-day falls in four years and it took the intervention of the US Federal Reserve and other central banks to support the markets. But while all around the markets were losing their heads, Hong Kong's brave and appropriately named Hang Seng (it means 'ever growing') remained cool and even managed to attain an all-time high at the end of August. Its signal therefore remains on "hold".

Investors piled out of equities and turned to government securities and gilts and it isn't that surprising to note that our UK all-stocks gilts indicator turned in a buy signal - the last "buy" signal occurred exactly three years ago.

IC/Coppock Indicators:

Market Market index * August † July † June † Latest  signal
UK Govt. Secs               145.62 -25.8 -26.0 -24.2 BUY
FT 30             2,843.19 +100.7 +109.3 +110.9 WAIT
FTSE 100            6,179.08 +54.2 +60.1 +58.4 SELL
FTSE All-Share            3,193.76 +65.2 +71.4 +69.8 SELL
FT Gold Mines            2,253.64 -13.4 -0.5 +8.2 WAIT
Amsterdam               790.97 +108.2 +112.0 +102.3 SELL
ASX All Ord            6,022.60 +124.6 +124.9 +117.4 SELL
S&P/ASX 200 Energy          13,350.65 +60.5 +60.9 +54.5 SELL
Belgium S.E.          34,227.01 +121.9 +134.1 +132.3 SELL
Dax (Germany)            7,463.64 +162.8 +159.1 +142.0 HOLD
Dow Jones          13,239.71 +97.9 +96.5 +87.5 HOLD
Rep of Ireland (ISEQ)            8,400.98 +116.5 +133.1 +136.6 WAIT
France CAC 40            5,534.74 +89.0 +97.0 +91.7 SELL
Hang Seng          22,320.68 +166.5 +164.8 +152.1 HOLD
Italy BCI            1,926.83 +83.7 +992.5 +90.7 SELL
S. Africa Gold            2,292.70 -37.4 -8.6 +21.8 WAIT
S. Africa Industrial          28,184.21 +242.6 +242.9 +225.9 SELL
Straits Times            3,339.83 +207.8 +203.9 +182.3 HOLD
Tokyo New S.E.            1,606.09 +32.2 +38.7 +32.1 SELL
Toronto Comp          13,417.83 +84.0 +87.1 +78.7 SELL
Toronto Gold            2,115.88 +11.1 +33.8 +50.6 WAIT
Sweden OMX            1,197.05 +145.2 +144.5 +130.50 HOLD
FTSE techMARK 100            1,647.14 +104.3 +95.0 +76.6 HOLD
Nasdaq 100            1,931.27 +97.9 +83.9 +459.9 HOLD

* Average index for the month of August 2007

† IC/Coppock Indicator

†† Unofficial signal

BUY/SELL = self explanatory; WAIT = you sold at the last sell signal and are now waiting for the next buy signal; HOLD = you bought at the last buy signal and are now awaiting the next sell signal.

ABOUT THE IC/COPPOCK INDICATOR

The IC/Coppock indicator identifies long-term buying opportunities. It is based on a mechanical system known as the 'long-term buying guide', which was devised by Edwin Coppock of Texas. This buying guide was then revised by the Investors Chronicle in 1963 - so it differs from the original system, which is still used by our columnist, The Trader.

Mr Coppock only used his indicator as a buying guide, but we also show the sell signals in our table (above), just for interest. However, caution must be exercised when viewing these sell signals because they do not always indicate the commencement of a bear market. Sell signals do indicate a downward movement in the particular index, but this may well be a mere dip in a continuing bull market.

In the table, you will see the latest indicator, followed by the figures for the previous two months. These indicators can rise and fall, and be positive or negative figures. So when an indicator is in its negative phase, and then begins to rise after a falling trend, this is a buy signal [eg –15.1 (Jan), –28.3 (Dec), –27 (Nov)]. When the indicator is in a positive rising phase, and begins to fall, this is a sell signal [eg +120.9 (Jan), +132.5 (Dec), +128 (Nov)].

Unofficial buy signals occur when the indicator begins to rise, but is not in the negative phase. These may give investors an extra opportunity to purchase shares. Conversely, unofficial sells are given when the indicator begins to fall while in the negative phase.

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