McClellan Oscillator And Index

The McClellan Oscillator was invented to provide overbought/oversold indication based on the A/D lines. It’s worked out by taking the difference between two EMA’s of the advance-decline figures. The actual periods used are 19 days and 39 days. It oscillates around zero, with the extremes at +100 and -100. If it is +100, the market is considered overbought, and if it is -100 then the market is oversold. Crossings of the zero line can also be used for buying and selling signals. Here’s the DJIA with the McClellan Oscillator added.

djia-mc-clellan

The McClellan Oscillator is used for trading on a short to medium term basis. McClellan also invented the McClellan Summation Index which is used for longer-term review of market breadth. It’s the running total of the McClellan oscillator daily values.

mc-clellan-oscillator daily values

The McClellan Summation Index gives a long range view of market breadth, and can be used to find major turning points.

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