McClellan Oscillator

What is the McClellan Oscillator?

The McClellan Oscillator is a breadth-momentum indicator developed by Sherman and Marian McClellan in 1969, building on P.N. Haurlan's early use of exponential smoothing in market analysis. Each day you take net advances (advancing issues minus declining issues, classically on the NYSE) and subtract the 39-day EMA of that series from its 19-day EMA. The result oscillates around zero: positive when short-term breadth is improving faster than its longer baseline, negative when it is deteriorating. Many modern implementations use ratio-adjusted net advances, dividing the daily difference by the sum of advances and declines (often scaled by 1,000), so readings stay comparable as the number of listed issues changes.

Readings above zero say the average stock is participating in gains; deep negative spikes often accompany selling climaxes, and divergences against the index warn that a price move lacks participation. The cumulative running total of the oscillator is the McClellan Summation Index, a slower gauge of the breadth trend. Like all breadth tools it describes participation, not price, so it is read alongside the index rather than instead of it.

How traders use it

• Zero-line crosses mark shifts in breadth momentum and are used to confirm or question index-level trend signals built from advance/decline internals.
• Extremes are read two ways: unusually deep negative readings flag washed-out selling that sometimes precedes rebounds, while extreme positives can mark either short-term overbought conditions or the kind of initiation surge studied under breadth thrusts.
• Divergences against price at new index highs, especially when other internals such as new highs − new lows agree, warn that leadership is narrowing.