1-16-2013 Comments

[Mike]

Hi Mike,

Regarding the coffee example, do you think it is better to analyze the futures or the ETF to generate the entry signal for coffee using Coppock - understanding one would enter a position using the ETF?

Regards,
Harry

Harry, I suspect that it would be better to time signals off of the futures contract when buying a commodites etf. I just checked and am seeing the same signal. I attach an image below of the monthly interval chart of coffee futures. I don't intend to trade this signal but am interested in the setup and will look for more setups like this for better testing. In looking back at prior signals on coffee many work, some don't. In the image the far left signal in 1998 didn't work at least not for long. There are five+ coppock buy signals on this chart. in the 2009 signal there is a wiggle that probably comprises two signals, same thing with the repeat 1998 signal in 1999. In the procedure developed for confirming follow-through days on the equity major indices the monthly is monitored for a trough development in the negative half plane (signifies a cyclical bear market shifting to a bull market) and then shift focus to the weekly chart for a fine tuned signal. A monthly chart is a blunt instrument. In the equity market we then look for a follow-through day to be confirmed by the coppock signal in the near vacinity. Plus or minus 4 weeks is a confirmation that shows much improved odds of a tradable rally vs. nonconfirmation. For something like trading coffee or gold a trade trigger is needed which needs some study. Possibly a pocket pivot or base breakout or moving average bounce or all of these.