The Summation Index (SI) is the companion to the
McClellan Oscillator. It is used as an
indicator of intermediate term to long term market moves. It is calculated by
using an accumulation of the MCOR. We are more interested in the patterns that
the SI makes as opposed to the values of the pattern at any given point in time.
A turning point may be indicated by a turn in the summation index either from heading downward to up or heading upward to down. This turn should be a pronounced turn to make it worthwhile. Again I would like to stress that it is important to take into consideration other market indicators when making your decisions.
Again with this indicator you can watch for formations such as triple tops and bottoms, you may also look for support and resistance levels.
Ledges may be formed in the SI by MCOR moving into an indecision pattern that is hovering around the zero line for a duration of several days. When this occurs near the end of down moves it may be an indication that the market may experience on more leg down before reversing into a powerful rally.
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