Sherman McClellan

Sherman McClellan

Sherman earned a degree in business administration and economics from Claremont Men’s College (now Claremont McKenna College), but found out after graduation that the standard types of fundamental analysis taught in school did not provide enough of the answers concerning why and when stock market prices moved.

Dissatisfaction with a number of methods for technical analysis led him to develop new techniques for assessing market conditions. Sherman and his mathematician wife Marian developed the McClellan Oscillator and Summation Index in 1969. It took their combined talents to do the work then, in a day when computers were unavailable, and when charts had to be drawn by hand.

Sherman brought these indicators to the public during guest appearances on Charting The Market, a technical analysis television program hosted by Gene Morgan which aired on  WHY in Los Angeles. As a result of these appearances, public interest in Sherman and Marian McClellan’s new indicators increased. They were invited by the late Mr. P. N. Haurlan, publisher of the Trade Levels Report newsletter, to publish a book detailing their research. The book Patterns For Profit was the result of this effort.

Development of the McClellan Oscillator and Summation Index took place before access to computers was widely available. The first edition of their book included 8 years of data on the Oscillator and Summation Index portrayed in comparison to the NYSE Composite Index, and all data points were computed and plotted manually. For the purpose of verifying the signals given from NYSE data, they also calculated and graphed Oscillators and Summation Indices using AMEX advance/decline data and NYSE and AMEX up-volume/down-volume. This was before the Nasdaq even became a market.

The amount of work required to perform the calculations this way limited the further development of market timing tools using these techniques. The development of personal computers opened up new capabilities for using the trend analysis techniques which are part of the McClellan Oscillator. Several popular market analysis software packages now include versions of the McClellan Oscillator and Summation Index. An updated edition of Patterns for Profit with 40 years of computer generated chart data is available from McClellan Financial Publications, Inc. Sherman’s years of experience at tracking the movements of the financial markets enable him to interpret current market events in the context of similar events seen in many other market cycles. He now uses several new indicating tools which are more complex and more powerful for short term trading than the Oscillator and Summation Index alone. These new tools are also based upon exponential moving averages of data from advances and declines, up and down volume, and price movements.

Sherman served on the board of directors of the Market Technicians Association from 2006-2009, and has conducted a number of seminars on the McClellan Oscillator and Summation Index for investor groups around the country. Under the auspices of Sherman McClellan & Associates, he provides market timing advisry service to selected institutional clients. From 1976 to 2003, he and his family also owned and operated Admiral Plastics Corp., a custom plastic injection molding company in Los Angeles.

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Letter from the Editor

The MTA Annual Award recognizes significant accomplishments in the field of technical analysis. It has been bestowed for pioneering work, an insightful innovation, or an extraordinary career. This year’s winner offers an example of an extraordinary career. Robert Peirce, the 2010 Annual Award winner is discussed briefly in this issue, and his story illustrates that technical analysis can be applied to investment management. All too often we hear that technical analysis is not widely accepted in the finance world. Nothing could be further from the truth, and Bob Peirce is but one  example among many where technical analysis was applied professionally. One problem that does damage the reputation of professional technicians is that many people attempt to apply technical analysis without possessing great skill or applying sound techniques. The best defense against the misconceptions inspired by poor analysis is quite possibly your MTA membership. We discuss that idea elsewhere in this issue and hope that all members will let potential employers and clients know that they are bound to follow the industry’s highest professional and ethical standards. Your MTA membership is proof of professionalism. As usual, we also offer examples of excellent analysis in Technically Speaking. Tom McClellan is advancing the work of his parents, and Sherman McClellan is another example of an individual who has enjoyed an extraordinary career in technical analysis. Their work is highlighted this month. We hope that the articles in this issue will inspire you to achieve greatness in your career as Robert Peirce and Sherman McClellan have. Sincerely, Mike Carr, CMT [post_title] => Technically Speaking, August 2010 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => technically-speaking-august-2010 [to_ping] => [pinged] => [post_modified] => 2020-03-19 19:08:34 [post_modified_gmt] => 2020-03-19 23:08:34 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => technically_speaking [post_mime_type] => [comment_count] => 0 [meta_id] => 418345 [post_id] => 47721 [meta_key] => newsletter_content_1_contributor [meta_value] => a:2:{i:0;s:4:"2544";i:1;s:5:"47723";} ) )