### What is the McClellan Summation Index

The McClellan Summation Index is a long-term version of the McClellan Oscillator, which is a market breadth indicator based on stock advances and declines. Sherman and Marian McClellan created and developed the McClellan Summation Index. Interpretation is similar to that of the McClellan Oscillator, except that it is more suited to intermediate to major trends and related reversals. The McClellan Summation Index can be calculated as the sum of all the daily values of the McClellan Oscillator.

### BREAKING DOWN McClellan Summation Index

The McClellan Summation Index is used in technical analysis and can be used to identify bullish or bearish bias, as well as the strength of the trend. It is a different way of quantifying the movements in the market other than looking at the price levels of the different indices, such as the S&P 500 and the Dow Jones Industrial Average. The McClellan summation has multiple interpretations and is considered neutral at a reading of +1,000. During the 1960s, the McClellan Summation Index generally stayed within the bounds of 0 and +2,000; however, the expansion of the number of stock traded on the NYSE has resulted in an expansion of the overbought and oversold corridor thresholds.

Some McClellan Summation Index rules of thumb include the following:

- Look for major bottoms below -1,300
- Look for major tops with a divergence above +1,600
- The beginning of large bull runs are sometimes indicated when the McClellan Summation Index crosses above +1,900 after moving +3,600 points from its prior low (e.g., the McClellan Summation Index moves from -1,550 to +1,950.

The index is calculated by adding the current day's McClellan Oscillator to the previous day's Summation Index, making it a cumulative measure of movements. The below formula represents one method of calculation for the McClellan Summation Index:

- $\begin{aligned} &\text{McClellan Summation Index} = \text{Previous Day's McClellan Summation Index} + \text{Current Day's McClellan Oscillator}\\ &\textbf{where:}\\ &\text{The previous Day's McClellan Summation Index value is equal to the } t=0 \text{ (initial value) McClellan Summation Index value for that specific period's McClellan Oscillator.} \end{aligned}$

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. The McClellan Oscillator — which the Summation index is based on — is calculated using 19- and 39-day exponential moving averages, which avoids applying large gains and declines of a few stocks to the whole market, thus it indicates the trend itself, as well as the strength of it.

See the index* here.*