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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: J D B who wrote (18912)	6/6/2002 8:05:11 AM
From: Bocor	Read Replies (1) \| Respond to of 26752

stockcharts.com McClellan Summation Index The McClellan Summation Index is a popular market breadth indicator that is ultimately derived from the number of advancing and declining stocks in a given market. Many people regard it as an excellent indicator of the overall "health" of the market and the market's current trend. It was developed by Sherman and Marian McClellan and first presented in their book "Patterns for Profit" (available from McClellan Financial Publications). There are two methods for calculating the Summation Index. The first method - the one originally used by the McClellans - simply maintains a running total of the values of the McClellan Oscillator (which is defined here). The second method uses the following formula: Summation Index = 1000 + (10%Trend - 5%Trend) - ((10 x 10%Trend) + (20 x 5%Trend)) where: 5%Trend = 39-day EMA of (Advancers-Decliners) 10%Trend = 19-day EMA of (Advancers-Decliners) The McClellan Summation index generally oscillates between 0 and 2000 although it can move outside of this range during extreme or unusual market conditions. Historically, major market bottoms occur after the index falls below -1000. Readings above +1600 often indicate a major top is near. Top and bottom signals carry more significance if the index is also diverging from the associated market average. According to the McClellans, the beginning of a new bull market is signalled if the NYSE-based Summation index first moves below the -1200 level and then quickly rises above +2500.