Coppock Market Message: Get Out And Check Back In Q1 '15
Charles Hugh Smith | May 05, 2014 01:48AM ET
Longtime contributor B.C. recently submitted a chart that combines two interesting market tools: 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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