McClellan Oscillator

The McClellan Oscillator is a market breadth indicator that shows overbought and oversold trends in the NYSE stock exchange. When it is positive money is coming into the market and negative values indicate money is leaving the market.

McClellan Oscillator

The McClellan Oscillator is a market breadth indicator that shows overbought and oversold trends in the NYSE stock exchange. When the McClellan Oscillator is positive it indicates money is coming into the market and negative values indicate money is leaving the market.

 


McClellan Oscillator Formula

The McClellan Oscillator is calculated as the difference between a fast and a slow Exponential Moving Average of the daily market breadth (daily advancers - decliners).  Typically, 39 days is used for the fast EMA and 19 days for the slow EMA.

Application of McClellan Oscillator

The McClellan Oscillator is primarily used for short and intermediate term trading of the NYSE composite index. When the indicator is positive, it generally portrays money coming into the market; conversely, when it is negative, it reflects money leaving the market.



When the McClellan Oscillator reaches extreme readings, it can reflect an overbought or oversold condition.The index is considered to be overbought when the oscillator lies between 70 and 100 and oversold when the indicator lies between -70 and -100. Over 100 and below -100 are considered to be extremely overbought and oversold conditions, respectively.

Example overbought and oversold conditions using the McClellan Oscillator

The McClellan Oscillator is a momentum indicator that works similar to MACD.  Signals can be generated with breadth thrusts, centerline crossovers and divergences.

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