Looking Beyond Price Trends With the McClellan Oscillator
The oscillator exposes whether market strength reflects broad-based buying or narrow leadership, a distinction that often determines whether rallies continue or reverse.
Explanation of the McClellan Oscillator, its calculation and how it measures market participation beyond price indexes
Interpretation of signals including positive/negative territory, divergences, breadth thrusts and historical extreme readings
Practical strategies for applying oscillator analysis, avoiding common mistakes and adapting to modern market structure
The most expensive mistake individual investors make isn’t picking the wrong stocks; it’s misreading market conditions. As market concentration reached extreme levels in 2024—with just seven mega-cap stocks driving the entire S&P 500 index higher while the average stock declined—many investors continued buying aggressively despite narrowing market participation. A 55-year-old breadth indicator could have warned them.