Don't Ignore This Chart!

McClellan Oscillators Remain Negative


The NYSE McClellan Oscillator ($NYMO) turned negative on March 4th and moved below -25 on March 6th, while the Nasdaq McClellan Oscillator ($NAMO) also turned negative on March 4th, but did not move below -25 until March 10th (red arrows). As these charts show, chartists can use crosses of the zero line for signals or set a bullish-bearish threshold to reduce whipsaws. There were dozens of crosses above/below the zero lines over the last six months. By using +25 and -25 to qualify signals, chartists can reduce whipsaws significantly. Whipsaw reduction, however, does come at the expense of timing. In other words, these signals will come later and after prices have moved, a bit like trend following. Notice that these indicators are updated after the close (end-of-day (EOD)). Chartists can create McClellan Oscillators that update during the day using MACD and net advances. Click here for a video tutorial. 

Click this image for a live chart

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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