McClellan Oscillator

The McClellan Oscillator, developed by Sherman and Marian McClellan in 1969, is a market breadth indicator that measures the acceleration and deceleration of participation across a broad market. It is calculated by subtracting the 39-day exponential moving average (EMA) of the daily difference between advancing and declining issues from the 19-day EMA of the same data. The oscillator fluctuates above and below zero: positive values indicate advancing issues are accelerating (broad buying), negative values indicate declining issues are accelerating (broad selling). Extreme readings above +100 or below −100 indicate overbought or oversold breadth conditions. Zero-line crossovers generate intermediate-term buy and sell signals. The McClellan Oscillator is particularly valuable for identifying "breadth thrusts" — extreme positive readings that historically precede major rallies. It is also useful for detecting divergences: if the market makes new highs but the McClellan Oscillator makes lower highs, fewer stocks are participating in the advance, warning of potential weakness. The cumulative version — the McClellan Summation Index — provides a longer-term perspective on the same data.