McClellan Oscillator McClellan Oscillator is a market breadth indicator. It is used primarily for short term and intermediate term trading. A small number of stocks making large gains characterizes a weakening bull market. It looks like the overall market is healthy; however, in reality the rising prices may come to an end soon. 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 calculation for the McClellan Oscillator is as follows: Subtract a 39 day exponential moving average of advancing issues - declining issues from a 19 day exponential moving average of advancing issues - declining issues. New York Stock Exchange data is used for the calculation. In a bear market, when the oscillator reaches about -150, it may indicate that the bear market is ending. In a bull market, when the oscillator reaches a reading of about +100, it may indicate that the bull market is ending. Also, when the oscillator goes from below zero to above zero, a bullish signal is indicated. Conversely, when the oscillator goes from above zero to below zero, a bearish signal is indicated. McClellan Summation Index The McClellan Summation Index is a cumulative total of the McClellan Oscillator. It is used for intermediate term and long term trading. Major tops occur when the index reaches +1600. Major bottoms occur when the index reaches -1300. After moving 3600 points in either direction, and the indicator reaches a level above or below +1900 or -1900, a significant bull or bear market is underway. Notice how closely the Summation index reversals also mark the intermediate turning points in the market. We have always found this to be a confidence builder and sanity check in the face of all of the bearish market prognostications. A full and extensive discussion of the McClellan Oscillator is available in "Patterns for Profit: The McClellan Oscillator and Summation Index" by Sherman and Marian McClellan. RETURN