Market Breadth Analysis Bob Nicholas has been involved in technical analysis of the markets since 1990. Through extensive historical research influenced mostly by Norman Fosback's book "Stock Market Logic", he developed a proprietary model in 1990 that incorporated many different market breadth indicators that assisted in forecasting the intermediate trend of the market. The indicators were used to determine the overall risk in the current intermediate trend of the market. In 1995, he began following the McClellan Oscillator (McOsi) which is a breadth based indicator to determine the more short term trend of the market. The McClellan Oscillator was developed by Sherman and Marion McClellan in the 1960's. |
In 1996, he began following the ITBM (Intermediate Term Breadth Momentum Oscillator) which is a breadth based indicator to determine more intermediate term market momentum. The ITBM was developed by Carl Swenlin of Decision Point. The McClellan Oscillator (McOsi) is a short term market breadth momentum indicator that is based on the daily advances minus declines on the New York Stock Exchange. When the McOsi is below zero, short term market breadth momentum is negative and when the McOsi is above zero, short term market breadth momentum is positive. |
A buy or sell signal is issued based on where the indicator is trending versus the important zero line. The ITBM is an intermediate term market breadth momentum indicator that is based on both the McOsi and its components. The indicator was developed to give a better perspective on the underlying intermediate trend of the market and reduce the short term whipsawing of the McOsi. The ITBM is positive when the indicator is rising above the zero line and the ITBM is |
negative when the indicator is declining below the zero line. However, the better way to follow the ITBM is whether the indicator is rising or declining regardless of being above or below the zero line. A buy signal is issued if the ITBM is rising and a sell signal is issued if the ITBM is declining. Both the McOsi and ITBM are best used in determining overall short term and intermediate term market risk because they guage whether the current momentum trend in the market has a bullish or bearish bias. |
