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The increasing number of issues traded on the NYSE over the years has caused the McClellan Oscillator and other breadth indicators to reach greater high and low extremes over the years, but these new record highs and lows oscillator readings did not accurately reflect the true internal condition of the market.

For example, let's compare the 1968-70 and 1998 Bear Markets, representing declines of about 36% and 20% respectively. Even though the 1968-70 decline was much more severe, the McClellan Summation Index readings (traditional calculation) were -2252 for 1970 and -3526 for 1998, giving the false impression that the 1998 Bear Market was worse than 1968-70. Using a ratio-adjusted calculation the Summation Index reading for the 1970 low was -2402 compared to the 1998 low of -1444, clearly reflecting the proportional relationships of the two bear markets, and making it possible to make an accurate historical comparison.

This is an important change. The basic input for the ratio-adjusted version of certain breadth oscillators is no longer the daily advances minus declines. Rather you (1) subtract declines from advances, (2) divide the result by the total of advances plus declines, and (3) multiply that result by 1000. (Multiplying by 1000 is simply cosmetic and lets us work with whole numbers instead of decimals.) The rest of the calculations for the oscillators are the same.

This change in the basic breadth input described above will also affect the:

1. McClellan Oscillator
2. STO (Swenlin Trading Oscillator)
3. ITBM (Intermediate-Term Breadth Momentum) Oscillator
4. 1% EMA of Advances-Declines

All will become ratio-adjusted indicators. I will carry both the traditional and ratio-adjusted versions of the McClellan Oscillator and Summation Index, but only a ratio-adjusted version for the rest.