McClellan Oscillator

What is the 'McClellan Oscillator'

The Mcclellan oscillator is the market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. It is primarily used for short and intermediate term trading.

To calculate subtract a 39 day EMA (of advancing issues - declining issues) from a 19 day EMA (of advancing issues - declining issues).

Simplified, it looks as follows: (19 Day EMA of Advances - Declines) - (39 Day EMA of Advances - Declines)

BREAKING DOWN 'McClellan Oscillator'

Usually, a small number of stocks making large gains characterizes a weakening bull market. This gives the perception that the overall market is healthy, but in reality it isn't, as rising prices are being driven by a small number of stocks. Conversely, when a bear market is still declining, but a smaller amount of stocks are declining, an end to the bear market may be near.

RELATED TERMS
  1. McClellan Summation Index

    The McClellan Summation Index is a long-term version of the McClellan ...
  2. Toraku Index

    A technical indicator that compares the number of advancing stocks ...
  3. Breadth of Market Theory

    A technical analysis theory that predicts the strength of the ...
  4. European Medicines Agency (EMA)

    A centralized government body whose goal is to promote and protect ...
  5. Market Breadth

    A technique used in technical analysis that attempts to gauge ...
  6. Absolute Breadth Index - ABI

    A market indicator used to determine volatility levels in the ...
Related Articles
  1. Technical Indicators

    Use The McClellan Oscillator To Measure Market "Breadth"

    How broad is the market? And, once we answer that question, how can we use that answer to our advantage?
  2. Technical Indicators

    This Indicator Should Always Be Part Of Your Strategy

    The relationship between price, 200-day EMA and its slope of generate useful patterns that assist in price prediction and trade management.
  3. Forex Education

    Simple Vs. Exponential Moving Averages

    These technical indicators help investors to visualize trends by smoothing out price movements.
  4. Trading Strategies

    Adapt The 50-Day EMA To Enhance Your Trading

    The 50-day EMA has numerous applications in price prediction, position choice & strategy building
  5. Insurance

    Exploring Oscillators and Indicators: Market Indicators

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The technical indicators that are generally aimed at specific stocks, which were discussed in previous sections, can also ...
  6. Chart Advisor

    Two Short Sales in the Banking Sector (BAC, C)

    These two banks show major rejection at long-term resistance and could test their first quarter lows.
  7. Stock Analysis

    Advance-Decline Line: Simple Breadth Indicator Can Be Used to Spot Trend Reversals

    Market breadth indicators are based on the number of stocks going up or down and the Advance-Decline (A-D) Line is the simplest way to measure breadth. Every day, the number of stocks that closed ...
  8. Active Trading

    Using The Force Index For Short- and Medium-Term Trading

    Here are the guidelines for making trading decisions using the force index in both a short and intermediate perspective.
  9. Chart Advisor

    Three Dow Relative Strength Plays (MCD, VZ)

    These three stocks lead the Dow Industrial Average in relative strength as we head into the 2nd quarter.
  10. Charts & Patterns

    The Most Important Moving Averages For Investors (AAPL, TLT)

    Investors focus on fundamental criteria to choose portfolio candidates but adding moving averages to their analysis will improve long-term performance.
RELATED FAQS
  1. How do I use McClellan Oscillator for creating a forex trading strategy?

    Learn how to construct a forex trading strategy using the McClellan oscillator technical indicator supplemented with a moving ... Read Answer >>
  2. How do I use Exponential Moving Average (EMA) to create a forex trading strategy?

    Use the exponential moving average (EMA) to create a dynamic forex trading strategy. Learn how EMAs can be utilized very ... Read Answer >>
  3. What are the main differences between Moving Average Convergence Divergence (MACD) ...

    Understand the exponential moving average, or EMA, and the moving average convergence divergence, or MACD, and their respective ... Read Answer >>
  4. What are the main advantages of using the Exponential Moving Average (EMA)?

    Learn the important potential advantages of using an exponential moving average when trading, instead of a simple moving ... Read Answer >>
  5. Why is the McClellan Oscillator important for traders and analysts?

    Find out why traders and analysts have long trusted the McClellan oscillator, a momentum indicator created by Sherman and ... Read Answer >>
  6. What is the Exponential Moving Average (EMA) formula and how is the EMA calculated?

    Learn the formula for calculating both simple moving averages and exponential moving averages, indicators that are frequently ... Read Answer >>
Hot Definitions
  1. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  2. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  3. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  4. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  5. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  6. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
Trading Center