The McClellan Oscillator is a market breadth indicator used by financial analysts of the New York Stock Exchange to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market. Developed by Sherman and Marian McClellan in 1969, the Oscillator is computed using the exponential moving average (EMA) of the daily ordinal difference of advancing issues (stocks which gained in value) from declining issues (stocks which fell in value) over 39 trading day and 19 trading day periods. The simplified formula for determining the Oscillator is:
Oscillator = (19-day EMA of Advances minus Declines) - (39-day EMA of Advances minus Declines)
The McClellan Summation Index is calculated by adding each day's McClellan Oscillator to the previous day's Summation Index. By using the Summation Index of the Mcclellan Oscillator, you can judge the markets overall bullishness or bearishness. Above zero the MSI is bullish; below zero it is bearish. The Summation Index is oversold at -1000 to -1250 or overbought at 1000 to 1250.
No comments:
Post a Comment