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CandleFocus Glossary Editor
The McClellan Oscillator is a market breadth indicator developed by Sherman and Marian McClellan and published on their website in 1984. It is also referred to as the Mc-Osc for short. The McClellan Oscillator is designed to quickly measure the strength of a market, whether it be stocks, bonds, commodities, or currencies. It combines the difference between two exponential moving averages of advancing and declining issues compared to the total number of stocks traded.
The McClellan Oscillator measures the difference between the advancing and declining issues of a market on any given day. This difference is then compared to the total trading volume on that day, which provides a unique insight into the market’s breadth. The oscillator is calculated using a 19-period exponential moving average (EMA) of advancing minus declining issues and a 39-period exponential weighted moving average (EWMA) of advancing minus declining issues.
A positive value is a bullish signal, while a negative value is a bearish signal. A reading that is significantly different from the historical average of the McClellan Oscillator is considered a momentum change. Chaikin Money Flow, Volume Accumulation, Money-Flow Index, and many other indicators reference the McClellan Oscillator to determine overall trends in the market.
It can be used to spot divergences, confirm or negate market trend or help time a trade entry. The McClellan Oscillator is considered an ‘oscillator’ because values range from excessive optimism to excessive pessimism around zero. Therefore, when the oscillator is above zero, the stock market is thought to be more optimistic than pessimistic and vice versa when it is below zero.
The McClellan Oscillator is a dynamic, very useful technical indicator that provides information about the underlying trend of a stock or index. A single reading cannot be considered meaningful without viewing its relation to other readings on the chart and considering other factors. Technical analysts often use this indicator as a way to confirm or provide evidence of a developing market trend.
The McClellan Oscillator measures the difference between the advancing and declining issues of a market on any given day. This difference is then compared to the total trading volume on that day, which provides a unique insight into the market’s breadth. The oscillator is calculated using a 19-period exponential moving average (EMA) of advancing minus declining issues and a 39-period exponential weighted moving average (EWMA) of advancing minus declining issues.
A positive value is a bullish signal, while a negative value is a bearish signal. A reading that is significantly different from the historical average of the McClellan Oscillator is considered a momentum change. Chaikin Money Flow, Volume Accumulation, Money-Flow Index, and many other indicators reference the McClellan Oscillator to determine overall trends in the market.
It can be used to spot divergences, confirm or negate market trend or help time a trade entry. The McClellan Oscillator is considered an ‘oscillator’ because values range from excessive optimism to excessive pessimism around zero. Therefore, when the oscillator is above zero, the stock market is thought to be more optimistic than pessimistic and vice versa when it is below zero.
The McClellan Oscillator is a dynamic, very useful technical indicator that provides information about the underlying trend of a stock or index. A single reading cannot be considered meaningful without viewing its relation to other readings on the chart and considering other factors. Technical analysts often use this indicator as a way to confirm or provide evidence of a developing market trend.