McClellan Oscillator – Definition, Uses & Examples One-Pager

We discuss what the McClellan Oscillator shows traders as a technical analysis tool and which components make up the data.

Read on to see a chart example of how you can read the McClellan Oscillator on a chart where the oscillator falls above or below the overbought or oversold line.

What Is The McClellan Oscillator?

The McClellan Oscillator uses advancing issues and declining issues on the New York Stock Exchange (NYSE) to gauge market breadth.

The components are:

1. Advancing Issues – Declining Issues
2. Calculate both the 19 & 39-day exponential moving average (EMA) of [Advancing Issues – Declining Issues]
3. Plot the result of the 19-day EMA minus the 39-day EMA

How To Read The McClellan Oscillator

Just like the MACD, when the short-term moving average crosses above the longer-term moving average, the plotted line crosses the zero line.

Therefore, when the McClellan Oscillator crosses above zero, the trend of the advance-decline issues is positive, giving us a bullish sign.

In contrast, when the McClellan Oscillator crosses below zero, the trend of the advance-decline issues is negative, showing a bearish sign.

Buy And Sell Signals With The McClellan

Generally, above +70 is considered an overbought condition, and below -70 is an oversold condition.

A trader might consider a buy signal when the McClellan Oscillator crosses above the -70 oversold line.

Similarly, a trader might consider a sell signal when the McClellan Oscillator crosses below the +70 overbought line.

Where Can I Test The McClellan Oscillator?

Further Reading on Volume Indicators

These volume tools complement McClellan Oscillator: Accumulation Distribution, Chaikin Oscillator, and Open Interest.

FAQs

What does the McClellan Oscillator show?

Similarly to the market thrust index or ‘breadth thrust’ index, the McClellan Oscillator shows the breadth of a chart. That said, the McClellan is used to indicate the constantly changing difference between the number of advancing issues and declining issues. It can also be used to detect divergence in a chart.