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Coppock, individual shares and the next bull market

September 20, 2022

I am not going to keep on showing this chart but at the moment it tells a vivid story of why shares and cryptos remain under pressure. The mighty surge of inflation rolling through the global economy is driving US bond yields higher and as long as that keeps happening it is going to be hard for shares to make a sustained rally. Think of share prices as the inverse of bond yields and you won’t be far wrong.

Meanwhile I am having more fun with my Coppock indicators. Tesla is a classic example of a 3G stock intent on world conquest. Elon Musk could hardly make it more explicit and insists that it is only a matter of time before Tesla becomes the world’s most valuable company. This would sound like hubris from anyone else, but from him, anything is possible.

This set me thinking. If I can use forward projections of Coppock to predict when the next general bull market in shares is going to begin, would this work for individual shares and if so would it work for Tesla. So I have been running the calculations and lo and behold Tesla’s Coppock, which is presently falling, looks likely to turn higher in March, just like the indices.

I tried it for another share I like, Snowflake and their Coppock could turn higher in January. This is a brand new technique taking Coppock into applications undreamed of by its 1930s creator but I am becoming very interested and may well back the results with real money.

It is a slow process at the moment doing the sums but I plan to get together with my brainy cousin and see if we can speed up the process dramatically. He is hopeful that there is a way and then we can fast-track the learning process. It is a classic example off using data to learn and in this case what I hope we are going to learn is how to make tons of money in the stock market.

Overall though this stock market remains at risk of plumbing lower levels and caution remains the watchword.

Strategy

This is completely random but I have been using Spotify to build a collection of songs that I like. I am a slushy sort of guy who likes romantic feel good music that makes my children cringe but what is amazing is that so far, using Spotify, I have found 1,550 songs that I like; that is maybe a week of non-stop music in the daylight hours which means I have effectively created a radio station, which only plays songs that I love and shuffles them so I don’t get bored. It has been a bit of a life changing experience. My life is even more of a soap opera than it was before and I love it.

Back to work. One of the things that I like about Elon Musk is that he is such an optimist. He is adamant that we still have time to save the planet. As I always imagined it is partly going to be changing behaviour but mainly ever accelerating technological change. Think of the world’s geeks as the US cavalry riding in to save the world. Yeeha!

A year from now inflation could be falling, there could be a yellow and blue flag flying in Moscow, Liz Truss could show us that she really believes in capitalism by abolishing inheritance tax and a few other things and the next bull market could be in full flight.

Inheritance tax is an old school tax based on a Marxist view of the world that is fast losing all relevance. Yes, many of us old timers are sitting on property assets that our children can only dream of acquiring for themselves but if we can hand them on without the state applying a massive and unfair dose of double taxation then the most entrepreneurial generations the planet has ever seen (millennials, Gen Z and so on) would be cashed up and raring to go and the effect on global growth could be seismic.

The cool thing about what is happening now is that we have had or are having the mother of all bear markets. Some sort of dip into recession in coming months looks a done deal and in the past these events have set the scene for huge new bull markets. Hence the work I am doing to make sure we spot the opportunities as and when they happen, which is not yet.

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