McClellan Summation Index
What Is the McClellan Summation Index
The McClellan Summation Index is a long-term form of the McClellan Oscillator, which is a market breadth indicator in light of stock advances and declines. Sherman and Marian McClellan made and developed the McClellan Summation Index.
Interpretation is like that of the McClellan Oscillator, then again, actually it is more fit to intermediate to major trends and related inversions. The McClellan Summation Index can be calculated as the sum of the multitude of daily values of the McClellan Oscillator.
Understanding the McClellan Summation Index
The McClellan Summation Index is utilized in technical analysis and can be utilized to recognize bullish or bearish bias, as well as the strength of the trend. It is an alternate approach to evaluating the developments in the market other than taking a gander at the price levels of the different indices, for example, the S&P 500 and the Dow Jones Industrial Average.
The McClellan summation has numerous interpretations and is viewed as neutral at a perusing of +1,000. During the 1960s, the McClellan Summation Index generally remained inside the limits of 0 and +2,000; be that as it may, the expansion of the number of stock traded on the NYSE has brought about an expansion of the overbought and oversold corridor edges.
Some McClellan Summation Index rules of thumb incorporate the following:
- Search for major bottoms below - 1,300
- Search for major tops with a divergence over +1,600
- The starting points of large bull runs are at times indicated when the McClellan Summation Index crosses over +1,900 in the wake of moving +3,600 points from its prior low (e.g., the McClellan Summation Index moves from - 1,550 to +1,950.
The index is calculated by adding the current day's McClellan Oscillator to the previous day's Summation Index, making it a cumulative measure of developments. The below formula addresses one method of calculation for the McClellan Summation Index:
