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How to Use the McClellan Oscillator

Hi,we had a McClose today... and we said that it would happen this morning in pre... I keep hearing questions like.. whats a McClose? .. or did we get a minor change?

How will this help ME?.. I put together a seminar about the McClellan oscillator .. and how i use it.. i hope this answers most of ur questions...
First of all ,
Q.  What is a McClose ?
A.  A word  Chuck invented to describe the close on a McClellan day
Lets start by opening up the 2 charts I look at each end of day.. 

Now make them large so you can really see them....

The 0 line (red) is very important .. as u see it never stays above or below it for more than 4 to 5 weeks. These are cycles that i watch ..  "Has it been on one side too long?"
Iceduck reports an intra day #PITSTOCK ..  This is about the daily McCLELLAN I use The McClellan Oscillator as a leading indicator.  If u compare the charts of the indexes to the charts of the oscillators you will see the same.  Mcclellan oscillator shows u when the market is overbought or oversold..and turns before the Indexes do .
This market breadth indicator is based on the difference between the number of advancing and declining issues on the NYSE (for nyse mcc ) and advancing and declining issues on the NASDAQ (FOR NAZ MCC). Primarily for short and intermediate term trading.

To calculate subtract a 39 day EMA of advancing issues - declining issues from a 19 day EMA of advancing issues - declining issues.

                    (19 Day EMA of Advances - Declines) - (39 Day EMA of Advances - Declines)

Overbought / Oversold

In the understanding of overbought or oversold situations, a true value of the oscillator is exposed. A chartist will see through the oscillators that the stock he or she has been tracking is running out of steam on the upside and is now moving into what we call an overbought situation.
This simply means that the buying volume is now starting to diminish from a number of trading days ago and that traders will now start to think about selling their shares.
 Conversely, when an issue has been sold by a greater number of investors for a period of time (this time frame can vary from 1-2 weeks to 3-6 months or longer), the volume of sellers will again reach a point where the issue is referred to as oversold.

Profiting from the Setup

I use it in a few different ways...
when overbought (when the osc. is at the top of the chart) I look for tops.
when oversold ( at lower end of the chart) i look for bottoms.
I find that the daily signals u early. and will turn before indexes do as i have mentioned.
Another good way to use this oscillator is watch it for crosses of the 0 line
You will get a good pop in the indexes in the same direction of the cross. if u miss it in pre, you can still catch it on pullbacks or bounces . You can do this because u can trust the direction of the crossover.  This will be one of those boring days that keeps going in one direction


The last way i will discuss today is The Minor Change
The rule is like this... if the oscillator has a change of 4 or less u have a minor change.
75 % of the time the indexes will move in the same direction of the change. You will
get an over 1% close in the next 2 days following the minor change.
We refer to this as THE McCLOSE ..  or a McClellan day..
1 exception.. if u get another minor change the following day.. this pushes it back another 2 days..
McClellan days tend to stay in 1 direction .. with little corrections .. boring .. unless u have the direction right... then its relaxing ..    so it may be boring .. but thats better than becoming the fuel (during the corrections) u will see in the long run its better to sit on ur hands if u dont want to trade mcclellan direction
On up Mcclellan days u dont want to short.
On down Mcclellan days u dont want to go long
This has saved me tons of money.
ITS NOT MAGIC FOLKS..its Mcclellan and if u want to follow along when we read these charts start here... 
I hope this has helped .. and maybe next time we have a McClose .. u will make money


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