Tom McClellan at LA Trader’s Expo
(StockFinder® screenshot of McClellan Summation Index in yellow plotted with S&P500 in green, red arrows mark important divergences between indicator and price.)
Tom McClellan’s hour at the LA Trader’s Expo started from a deep historical perspective and carried through to current market conditions. Los Angeles was a fitting locale because it was actually reporting on local LA television stations that made popular the McClellan Oscillator and McClellan Summation Index. These two indicators were developed by the speaker’s parents, Sherman and Marian McClellan respectively. The McClellan Oscillator and Summation Index are market-wide indicators whose mission is to help traders and investors get an early sense of market trend, the strength of the trend, and impending changes.
Part of the talk focused on the construction of the McClellan Oscillator and the McClellan Summation Index. Rather than repeat it here, you can find it at the McClellan website.
One thing I want to highlight is that the McClellan Oscillator is the difference of two EMAs of the Advance/Decline line which means it is actually a MACD of the Advance/Declines. Evidently both the McClellan Oscillator and the MACD were invented independently at about the same time. What an interesting confluence of events!
Another somewhat geeky point is that the Advance/Decline data varies between vendors. The Yahoo data includes ETFs while the Wall Street Journal Advance/Decline number does not include ETFs. According to Tom McClellan, the difference in end results is not that large, but its nice to see that he is on top of data sources and using clean data for his calculations.
June 16th, 2009 Filed under ClassesTags: Advance/Decline, indicator, McClellan Oscillator, McClellan Summation Index, Traders Expo
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I’m very interested in your Backtesting subscription. I am a novice to stockfinder and will be using that software as I explore backtesting and systematic trading. So I’m interested to know if your diagrams and the charts that you use, are taken primarily from Trade station or from Stockfinder, ie will I also have to ramp-up to the Tradestation program in order to get the most out of your approach? Thanks, Chris Curry
Hi Chris
Thanks for your comment and your questions.
You don’t need to have TradeStation or even know anything about it to understand BackTesting Report. Using StockFinder is also optional.
Either one will help you with more powerful charts and scans thoughs. You can then learn faster and once actively trading make it easier to identify and manage trades without all day at the computer.
To facilitate this, I am making available some modules for StockFinder and TradeStation which implement the “best of test” strategies from the BackTesting Report. So far, they are just included with the MACD Sell Signals BackTesting Report and the Missing Link BackTesting Report (which has only shipped to subscribers so far). Eventually, I may need to charge separately for the software plug-in modules.
As to what I use, its a mixture because I like to use the best tools for the particular job. At this moment, its TradeStation for backtesting and I often take TradeStation screenshots within the reports. All the StockFinder modules in BackTesting Report come with instructions and those instructions have screenshots from StockFinder and show you how to set it up.
To scan the market for opportunities, I use StockFinder for the relatively recent scans I’ve created based on BackTesting Report and as mentioned above those currently ship to subscribers. (I also have some older scans that I run for myself using the old Blocks software from Worden. Also for my personal use I do a weekly review of the market which used to be in TeleChart and I’m migrating to StockFinder over time) Once the scans identify an opportunity and I want to take it, I presently track the stop prices in TradeStation. I would also like to migrate this activity to StockFinder and it will probably happen in conjunction with an upcoming BackTesting Report issue on stop losses and exit strategies. At that time, I’ll port my software to StockFinder, make it available to customers, and use it myself as well.
I really like StockFinder for my own use and for supporting customers. In fact, I liked it enough to become an affiliate and get paid to recommend it to others. However, I still use TradeStation for some tasks so you will see references to both in BackTesting Report.
Best wishes for your exploration of systematic trading,
Jackie