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The McClellan Oscillator and the McClellan Summation both have a fundamental
problem: they rely on the difference between two exponential moving
averages of advancing and declining issues. As we all know, there has been
a steady increase in the number of issues traded on the NYSE. Therefore,
the Oscillator and Summation indices are moving faster and to greater
extremes simply because more issues are traded.
The McClellan's who developed their indicators recognize this problem.
Although it's not widely publicized, a simple change in definition solves
the problem. Don't subtract the difference between the two exponential
averages, divide the faster MA by the slower MA. These "adjusted"
indicators are far more valuable to anyone who is looking at the indicators
over many years. For short term traders, it probably doesn't make a
difference as long as they know that extreme values are more easily reached
due to the greater number of issues traded.
This adjustment is similar to using a rate of change indicator vs. a
momentum indicator.
Ross Kovacs
> ----------
> From: fpi@xxxxxxxxxxxx[SMTP:fpi@xxxxxxxxxxxx]
> Sent: Thursday, August 20, 1998 2:37 PM
> To: omega-list@xxxxxxxxxx
> Subject: McClellan Oscillator
>
> You wrote:
>
> Dear TS users:
> Would someone take pity on this newbie and help me set up my McClellan
> Oscillator? I have TS 4 build 19 with BMI realtime. I have been charting
> the spoo. Thanxs Harry
>
> _____________________
>
> Firstly,in my experience, BMI realtime SUCKS in terms of accurate advances
> & declines data because they don't update it after the close.
>
> Therefore, if you use that data, better check in next day's newspaper or
> use an end-of-day data feed or check somewhere online to get more accurate
> data at some point or over time you'll have an inaccurate indicator. I've
> complained to BMI, but they just mumbled something about Omega's Y2K patch
> & then the line went dead.
>
> I use Dial Data end-of-day in addition to the realtime BMI & if you
> download after approximately 7:30PM Eastern, it will agree most of the
> time
> with the Investor's Business Daily figures. It will certainly be close
> enough that it won't materially affect the McClellan oscillator
> calculations.
>
> That said, here's how to make a workspace for the McClellan oscillator:
>
> 1) Open a new workspace.
>
> 2) Select @NA (for BMI). Click on plot & after selecting the number of
> days
> of daily data, click on Properties.
>
> 3) Make sure @NA is Data1 & under subgraph select Hidden.
>
> 4) Right mouse click & select Insert Price Data.
>
> 5) Select @ND, ensure that it is Data2 & under subgraph select Hidden.
>
> 6) Right mouse click & select Insert Analysis Techniques.
>
> 7) Under indicators, select McClellan Oscillator.
>
> That should do it.
>
> FPI
>
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