Do you pay attention to the McClellan Oscillator? If you trade stocks, especially on a short- to intermediate-term basis, you’ll want to get to know this important NYSE indicator. The McClellan Oscillator measures market breadth. It’s calculated by comparing the number of advancing stocks on the New York Stock Exchange – those gaining in value – compared to the number of those declining.
There’s also the McClellan Summation Index, a longer-term version of the McClellan Oscillator. In a nutshell, a reading above zero can be interpreted as bullish while a reading below zero is considered bearish. What’s great about the McClellan (the Oscillator or the Summation Index) is that it can help you determine whether the current direction of the stock market is driven by just a small number of stocks or is indicative of movement by a broad array of equities. Obviously, this information can be very useful when making trading decisions.
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