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50 Years Since Creation of the McClellan Oscillator

 
weekly Chart In Focus

It was 50 years ago in 1969 that my parents created what later became known as the McClellan Oscillator.  So this week, I thought I would share a little bit of that history, and offer a look at how it was done back then. 

My father Sherman McClellan is still alive and doing well at age 84, and I get the privilege of collaborating with him every day on our McClellan Market Report newsletter and our Daily Edition.  My mother Marian McClellan passed away from cancer in 2003.  The important... Read More

Rainbow Convergence: Some Charting Magic

 
weekly Chart In Focus

One of the chart features that I discuss quite often in my Daily Edition is what we call a “rainbow convergence”.  It is named for the point on the chart where all of the pretty moving average type lines come together.  Some of those indicators may be new to some readers, so you can get a quick tutorial on what they mean at this article

A rainbow convergence can be important to watch because the way that prices behave as it is happening gives us information about what lies ahead.  There... Read More

As Goes January…? Really?

 
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The stock market’s relationship to its normal seasonality has gotten wacky lately.  October to December is supposed to be an up period for stock prices, and instead we saw a very sharp correction.  In recent years, January has typically seen a meaningful decline, but the stock market instead powered higher.  In fact, the DJIA’s 7.2% gain in January 2019 was the strongest January since 1989.

This makes for a good time to bring up the old idea of the “January Barometer”, which is the belief... Read More

Junk Bond Strength is Bullish For Stocks

 
weekly Chart In Focus

High-yield bonds, or “junk” bonds, are corporate bonds, but they trade a lot more like the stock market than they do like T-Bonds.  What’s more, they are much more liquidity sensitive than most stocks, and so when liquidity turns bad (or good), it often shows up first in the behavior of junk bonds.

FINRA publishes each day the Advance-Decline (A-D) data for corporate bonds, breaking them down into different categories.  This week’s chart features a cumulative Daily A-D Line for FINRA’s... Read More

Countertrend Rally or New Uptrend? RASI Holds The Key

 
weekly Chart In Focus

“Gobs of breadth is a good thing.”  That is one of my favorite sayings, and we seem to be getting it since the Dec. 24, 2018 bottom. 

When there are multiple days in a short period with really strong Advance-Decline (A-D) numbers, it is a sign of strong liquidity.  It is possible to lift a few important stocks when liquidity is tight and the mood swings bullish.  But to lift the majority of stocks takes a much bigger firehose of money coming in.  So when we see a lot of strong breadth... Read More

Crude Oil Leads Bond Yields

 
weekly Chart In Focus

If you want to know what long term bond yields are going to do, you don’t need some fancy econometric model that incorporates GDP growth, unemployment rates, factory utilization, and all of the many other data series that economists watch.

You just need to watch crude oil prices, and then wait 3 weeks.

This week’s chart compares the Treasury Yield Index (TYX) to the price of the near month crude oil futures contract.  The catch is that the oil price plot has been shifted forward by 3... Read More

Santa Claus’ Report Card Is In

 
weekly Chart In Focus

If Santa Claus should fail to call, the bears may come to Broad and Wall.

That’s the old saying in the financial markets, referring to the “Santa Claus Rally” period which consists of the last 5 trading days of the year plus the first two of the next year.  Yale Hirsch first took on the task of quantifying this in his Stock Traders’ Almanac, and in his book, “Don’t Sell Stocks On Monday”. 

The basic idea is that this period is usually an up one for the stock market, and my own research... Read More

 
Daily Timing Chart

 

02/20/2019 IssuesVolume(000s)
McC OSC 147.524 200794
Sum Index 4526.901 3299804

More Data

The McClellan Oscillator

 

OscillatorCreated 1969, the McClellan Oscillator is recognized by technical analysts as the essential tool for measuring acceleration in the stock market. Using advance-decline statistics, it gives overbought and oversold indications, divergences, and measurements of the power of a move.