2. To put Coppock indicator in simple language one can state that it is a long term indicator which helps in predicting the start of bull market and announces the ending of bear phase in the market. It is one of the simplest indicators as it only provides two signals i.e. when indicator turns positive; it shows that it is the start of the bull market and when it moves below Zero; it means that bear market is starting.
Dangers of Coppock indicator
One must understand the danger of the indicator's over-reliance on the 14- and 11-month’s rate of change, which have been known to create buy signals during bear market rallies, particularly where those rallies have lasted for several weeks. These can easily be created, particularly where too many investors seek to call the start of the next bull market. Thus one has to be careful while using this indicator.