Tour de force from a veteran with pedigree: Tom McClellan on Market Breadth
One of the many excellent international speakers the STA has invited to our webinar-based monthly meetings, now billed as ‘Ask the Expert Series’, with Tom we get to hear things straight from the horse’s mouth. Editor of The McClellan Market Report newsletter, and its companion Daily Edition, he’s a graduate of the US Military Academy at West Point, served as an Army helicopter pilot for 11 years before taking up a new career as a stock market analyst. He is the son of Sherman and Marian McClellan, who together created the McClellan Oscillator Index in 1969.
‘’My mother was a computer and maths major’’ (who then went on to also devise the McClelland summation index) ‘’and I benefited from not having a degree in economics’’. At the age of 6 his parents gave him one share in Walt Disney stock; sadly he sold this in the 1970’s to buy a Yamaha motorbike. His attitude towards to market, he says – where his focus is very much on US stock indices – is more akin to that of a physicist who is looking for the best canaries in the cage.
An imposing figure in a study crammed with books on shelves, he talks fast and warns us that he’s ‘’going to show you way too many charts’’. He does, maybe, but then the ones he has are so clear (black on white background), succinctly labelled with no unnecessary lines. Covering lots of market tops – because the Advance/Decline (AD) line works better with these than at market bottoms – over a very many decades, these are real gems which include up to the minute examples too. Warning that ‘’liquidity problems are more difficult to get through than emotional problems’’, and are something that like the wind one cannot see, he feels the AD line is a proxy for the former.
He also warns that while 93% of the volume on the New York Stock Exchange is comprised of common stocks, these represent only about half of all listings. He likes the Bond Closed End Funds because he feels they are an early warning signal to potential problems ahead. He also says that the NASDAQ is like the boy who cried wolf as very often the AD line gets it wrong. Better still, he says that often one gets a ‘’squishy message from the market’’; i.e. unclear. ‘’Boy I wish the market would be clear all the time – but it isn’t’’.
See his website www.mcoscillator.com for free and discounted trials.
STA members are lucky in that they can view or review this pièce de resistance on video. A must watch!
Tags: advance decline, Breadth, liquidity, oscillators
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