Sutte indicator: An approach to predict the direction of stock market movements

Abstract

The purpose of this research is to apply technical analysis of Sutte Indicator in stock trading which will assist in the investment decision making process i.e. buying or selling shares. This research takes data of “A” on the Indonesia Stock Exchange (IDX or BEI) 29 November2006 until 20 September 2016 period. To see the performance of Sutte Indicator, other technical analysis are used as a comparison, Simple Moving Average (SMA) and Moving Average Convergence/Divergence (MACD). To see a comparison of the level of reliability prediction, the stock data were compared using the mean absolute deviation (MAD), mean of square error (MSE), and mean absolute percentage error (MAPE). The result of this research is that Sutte Indicator can be used as a reference in predicting stock movements, and if it is compared to other indicator methods (SMA and MACD) via MAD, MSE, and MAPE, the Sutte Indicator has a better level of reliability.

Keywords

• stock market
• Sutte Indicator
• technical analysis
• predicting