McClellan Oscillator Indicator | Indicator Series

The McClellan oscillator, along with the McClellan Summation Index, was developed by Sherman and Marian McClellan.

This oscillator takes the amount of advancing stocks, those that have risen in price minus the declining stocks, those that have declined in price.  

It is calculated using the 19-day and 39-day exponential moving averages (EMA), which makes sure that large gains and declines of a small number of stocks are not factored in when looking at the whole market.  This oscillator is used for short-term to medium-term timing. (Click this link to access an economic calendar for your trading strategies)

Bullish And Bearish Markets

If the oscillator signal rises above the zero line, this can confirm that the market or index, as a whole, is also rising in a bullish state.

If the oscillator signal reads below the zero line, this can confirm that the market or index is also declining into a bearish state. 

Trends

A noticeable change, such as if the oscillator moves 100 points or more can signal a change in trends.  

If the signal moves from a negative position to a positive position, 100 points or more, this can indicate a reversal from a downtrend to an uptrend.

If the signal moves from a positive reading to a negative reading, 100 points or more, this can indicate an uptrend reversing into a downtrend.

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Divergence

When the oscillator is rising but the market or index is falling, this can indicate the market or index will start to rise into a bullish state.

When the oscillator is falling but the market or index is rising, this can indicate the market or index will start to fall into a bearish state.

Used with other technical analysis tools, this oscillator helps determine the overall health of the market or index and determine the strength of the current trend.  It can also compare one index or market to another.  

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