Time Frame: Medium-Term | Update Schedule: Daily | Source: NYSE
Construction:
The Oscillator is based off worked pioneered by Sherman and Marian McClellan and is currently carried on by their son Tom (search the web for "McClellan Oscillator" for more background).
It is essentially a look at the momentum of the underlying breadth of the market. When it is above zero, momentum is positive; below zero, it is negative. It also works as an overbought/oversold indicator when it pushes above +100 or below -100, respectively.
During times of major trend change, the indicator will often hit an extreme, then the market will fail to react, suggesting a change in the market's tone and a higher probability that the overall trend is changing.
