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The McClellan Oscillator
is a market breadth indicator that is based on the smoothed
difference between the number of advancing and declining issues on
the subject index. The indicator was developed by Sherman and Marian
McClellan. Extensive coverage of the oscillator is provided in their
book "Patterns for Profit".
A healthy bull market is
accompanied by a large number of stocks making moderate upward
advances in price. A weakening bull market is characterized by a
small number of stocks making large advances in price, giving the
false appearance that all is well. This type of divergence often
signals an end to the bull market. A similar interpretation applies
to market bottoms, where the market index continues to decline while
fewer stocks are declining.
The McClellan Summation
Index is a market breath indicator based on an accumulation of the
McClellan Oscillator (see description immediately above). The
McClellan Summation Index is a long-term version of the McClellan
Oscillator. Its interpretation is similar to that of the McClellan
Oscillator except that it is more suited to major trend reversals.
The Percentage of Component Uptrends
measures the total number of components within the particular index
or ETF that are in uptrends (as defined by MasterDATA's Trend
Channel indicator). If knowing the current trend of the
subject index or ETF is important, knowing the current trend of
every component issue within that index or ETF provides tremendous
insight into the "guts" of what is happening. Indications of
possible overbought and oversold conditions as well as potential
Index turning points and/or likelihood of a continuing trend.
The total number of new
one year highs and new one year lows within an index or ETF is
calculated for the specified data period. There is a definite
tendency that one new high will be followed by subsequent new highs.
When new one year highs decline, be cautious. When they decline
after several days of new highs, a consolidation or correction may
be eminent. New highs may also mark the beginning of a price move. |
