September 16th, 2011
by John Lounsbury
There is an interesting stock market indicator circulating around the internet today (Thursday, September 15). It is called the Killer Wave indicator and has given a sell signal eight times in the past 83 years, preceding every major bear market, according to Dominic Picarda of Investor's Chronicle. The average loss following these signals has been more than 39%, so the track record is pretty good. The record is such that it has gotten my attention.
Follow up:The signal is based on a pattern in the Coppock Curve. This is an oscillator developed in the early 1960s to identify when bottoms in the stock market had bee safely passed. It has since been used also to identify when peaks in markets are near. It is not an exact timing tool; some signals have occurred 1-2 years before an eventual top. However, it has a 100% record in predicting that a major decline is coming soon and has yet to "misfire". For further details, see Wikipedia.
Dominic Picarda has a video explaining the Killer Wave in some detail, shown below.
Click on image below to watch the Killer Wave video.
One of the persons publicizing the Killer Wave is Albert Edwards of Societe General, who is an extreme bear, having forecast the S&P 500 index reaching a low around 400 in the next few years.
Note: GEI Associate Ghamal de la Guardia has posted a detailed analysis of the Killer Wave entitled “Killer Wave not Always a Killer”
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