What It Takes to Get The McClellan Oscillator to Zero

By now I hope that all of my readers are already familiar with the McClellan A-D Oscillator, the famous indicator that my parents Sherman and Marian McClellan created in 1969.  I want to talk in this article about a derivative indicator related to the Oscillator.  This week's chart shows a plot of the daily value for Advances minus Declines (A-D) that would be needed to take the Oscillator exactly to zero.

That is a nice number to know in case you are watching for a trading signal based on the Oscillator crossing the zero line.  Knowing what it takes to get the Oscillator to zero gives you a number to watch for, and if the A-D number exceeds that then you can know that the Oscillator would have crossed the zero line.

Calculating it involves a little bit of algebra.  The McClellan A-D Oscillator is calculated as the difference between the 10% Trend and 5% Trend of the daily A-D difference.  Some people would call those a 19-day and 39-day EMA, but we prefer the originalist terminology first employed by the late Pete Haurlan, who first introduced the use of exponential moving averages (EMAs) to tracking stock market data in the 1960s.

Tomorrow's McClellan A-D Oscillator value is a function of today's values for the 10% and 5% Trend, plus tomorrow's A-D number.  So in the formula if you set tomorrow's McClellan Oscillator value to zero, then you can back-calculate the A-D difference that would be required to get that number.  I'll save you all of the algebraic derivation, and just show you the formula as follows:

Oscillator to Zero = (19 x 5% Trend) - (18 x 10% Trend)

Now that we have that unpleasant part out of the way, let's get to what we can do with this number.  The NYSE in 2025 has about 2,800 issues traded every day.  So even if all of the issues were up, or all were down, the McClellan A-D Oscillator can only move just so many points due to the math.  Sometimes (like right now) we see the McClellan A-D Oscillator go to a really extreme value, i.e. +244 as of April 24, 2025, and so it is a really long distance to get back to zero.  And the Oscillator To Zero number for this trading day is -4,274.  That means there would need to be 4,274 net declining issues on April 25, to get the Oscillator down to zero.

That is an impossibility, because there are not that many issues traded on the NYSE.  So it is an extreme number.  The upper and lower threshold lines in the chart above help us to see that when the Oscillator To Zero number gets to an impossible value, it marks an extreme for stock prices.

Now, an extreme negative number like the most recent posting is usually not seen at the end of a price rally.  Or at least that is true when the stock market is in an uptrend, like it was for all of 2023 and 2024.  In a bear market, though, the rules can be different.  It is possible to see a really high McClellan A-D Oscillator reading at the end point of a countertrend rally. Here is a chart from 2022, which shows that the low readings in that year were not markers of the initiation of new uptrends.

So it is also possible to see a really extreme negative Oscillator To Zero value at the end point of a rally, if you are in a long term downtrend, as I believe we are here in 2025.

You can read more articles about the McClellan Oscillator in our Learning Center here:
https://www.mcoscillator.com/learning_center/kb/mcclellan_oscillator/