The Summation Index Indicator is very similar to McClellan Oscillator.
The Sum Ind. is the mid-term version of McClellan Oscillator.
In fact, the McClellan Oscillator is too much volatile.
In fact, it is the cumulative sum of the result of the McClellan Oscillator formula.
The Summation Index allows you to determine the strength or weakness of the stock index.
Positive and increasing Sum. Ind., confirms a bullish trend.
Negative and decreasing Sum. Ind., confirms a bearish trend.
The Sum. Ind. I can report the exhaustion of the current trend when there are negative or positive divergences with prices.
In a higher time frame, the Summation Index provides the following operational insights:
With a positive divergence between prices and the indicator, we know that there are significant lows.
With a negative divergence between price and the indicator, we know that there are significant highs.
You can use the Sum. Ind. in conjunction with the McClellan oscillator to perform better.
Firstly, when the Summation Index is increasing and the McClellan oscillator is above its equilibrium line, a bullish trend is strong.
Finally, when the Summation Index is decreasing and the McClellan oscillator is below its equilibrium line, a bearish trend is strong.
We can calculate the Summation Index on different baskets: the S&P500, NYSE, and Nasdaq.