Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “MCCLELLAN OSCILLATOR” Developed by Sherman and Marian McClellan,
the McClellan Oscillator is a breadth indicator derived from Net Advances, the number of advancing
issues less the number of declining issues.
Subtracting the 39-day exponential moving average of Net Advances from the 19-day exponential
moving average of Net Advances forms the oscillator.
As the formula reveals, the McClellan Oscillator is a momentum indicator that works similar
to MACD.
McClellan Oscillator signals can be generated with breadth thrusts, centerline crossovers,
overall levels and divergences.
Usually, a small number of assets making large gains characterize 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 assets are declining,
an end to the bear market may be near.