Sutte Indicator: an approach to predict the direction of stock market movements

TL;DR

This study evaluates the Sutte Indicator's effectiveness in predicting stock market directions and finds it more reliable than SMA and MACD using various error metrics.

Contribution

It introduces the application of the Sutte Indicator for stock prediction and compares its performance with traditional indicators using multiple accuracy measures.

Findings

Sutte Indicator outperforms SMA and MACD in reliability.

It provides a useful reference for predicting stock movements.

The indicator shows better accuracy based on MAD, MSE, and MAPE.

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 November 2006 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.