1. Finding Potentially Outperform Stocks
with Technical Analysis and Bloomberg
MM Dandytra, CSA, CFTe

2. English Is Not My Mother Tongue
CFTe Lv.2 Exam

3. Today’s Subjects
 The Foundation of Technical Analysis
 Outperform – Underperform
 Relative Rotation Graph
 Tom Dorsey’s Method
 Ratio Chart or Relative Comparison Chart or
Relative Strength
 “Perfect” Technical Analysis Indicators
 Relative Comparison with Bloomberg Portfolio
Charts

4. Technical Analysis

5. Technical Analysis
John J. Murphy
• “Technical Analysis of the Financial Markets”
• The study of market action through the use of chats for the
purpose of forecasting future price trends
Martin J. Pring
• “Technical Analysis Explained”
• The art to identify a trend reversal at a relatively early stage
and ride on that trend until the weight of the evidence shows
or proves that the trend has reversed
John D. Magee and Roberts D. Edwards
• “Technical Analysis of Stocks Trends”
• The science of recording in graphic form the actual history
of trading and then deducing from that pictured history the
probable future trend

6. The Use of Technical Analysis
Technical
Analysis
Trend
Analysis
Timing
Analysis
Price
Analysis
Investment
Strategy
Decision &
Action

7. Technical Analysis “Branches”
Technical
Analysis
Classic
(Chartist)
Modern
(Indicators)

8. Technical Analysis
Technical
Analysis
Basic Theory
Dow Jones
Theory
Trend
Analysis
Supply
Demand
Line Analysis
Support
Resistance
Trendline
Channel
Price Pattern
Analysis
Candlestick
Bar Chart
Gap Analysis
Chart Pattern
Analysis
Reversal
Pattern
Continuation
Pattern
Hybrid
Pattern
Volume
Analysis
Spesific
Theory
Elliot Wave
Gann Method
Fibonacci
Method
Indicators

9. Indicators
Indicators
Momentum
Stochastic
Oscillator
RSI
Trend
Following
Moving
Average
MACD
Volume
On Balance
Volume
Volatility
Bollinger Band
Average
Trading Range
Sentiment
Market
Breadth
Advance
Decline
Quantitative
Methods
Standard
Deviation
Linear
Regression
Line

10. Technical Analysis’ Premises
 Price Discounts Everything
 Insider Trading (or Speculation) always occurs
 Semi – Strong Form Market (Market Data and Public
Information are available)
 Price Moves in Trend
 Price movement is not random
 Random Theory is wrong
 History Repeats Itself
 What has happened will probably happen again
 There are certain patterns or cycles

11. Technical Analysis Chart

12. Outperform - Underperform

13. Why Investor Trade / Invest in Stocks
 Dividend
 Capital Gain
 Exceed Cost of Capital
 Inflation
 Free Risk Interest Rate
 Internal Required Return
 Exceed certain Benchmark
 Market
 Other Index

14. Exceed The Benchmark
 Earn bigger Gain than JCI
 21 Sept’12 – 31 Okt’12
 ADHI +53% vs JCI 2%
 Experience Loss fewer than JCI
 8 Agus’11 – 29 Sept’11
 ASII -2% vs JCI -8%
 Record Gain even when JCI falls
 25 Apr’12 – 31 May’12
 ACES 22% vs JCI -8%

15. ADHI

16. ASII

17. ACES

18. So …
 Outperform means Exceed Benchmark
 Earn bigger Gain than JCI
 Experience Loss fewer than JCI
 Record Gain even JCI fall
 Underperform means Not Exceed Benchmark
 Earn fewer Gain than JCI
 Experience Loss bigger than JCI
 Record Loss even JCI rise

19. This seminar aim to help you find
stocks that will Outperform JCI and
also your Portfolio Basket using
Technical Analysis and Bloomberg
tools

20. Tom Dorsey Method

21. Who Is He ?
 Co-founder of Dorsey, Wrigth & Associates (DWA) in
1987, an investment firm in Virginia, U.S
 Fund Manager whose funds often beat market by
using Technical Analysis method

22. How They Do That ?
 Using Point & Figure Chart and Relative Strength to
maket their funds Outperform
 Relative Strength of :
 Stocks and Index
 ETF and MSCI
 Certain Index and Index Basket
 Divide the numerator (stock) and the denominator
(index) then convert it into Point and Figure Chart

23. Point and Figure Chart Analysis
 Point and Figure Analysis mostly is Chart Pattern
analysis (and a powerful one)
 However, the most difficulty in conducting Point and
Figure Analysis is user must find a correct “Box Size”
and “Box Reversal”

24. ASII in Point and Figure Chart

25. Why are we talking about Dorsey ?
 Tom Dorsey and DWA proves that Relative Strength
method can be useful in order to find stocks or ETF
that Outperform market
 Relative Strength is not necessarily have to be in
form of Point and Figure
 Relative Strength can be in other Price Pattern such
as Candlestick and Line Chart

26. Relative Rotation Graph (RRG)

27. What is Relative Rotation Graph (RRG) ?
 A method created by Julius de Kempenaer and
developed by Trevor Neil
 Available in Bloomberg since 2011  RRG <GO>
 A new method that Proof Instruments are Rotating
(similar with Cycle analysis)
 RRG can also be used to find Instruments that are
Outperforming and Underperforming as well as
Rising and Falling

28. The Appearance of RRG

29. 4 Sides of RRG
IMPROVING
(Rising but
Underperform)
LAGGING
(Falling and
Underperform)
LEADING
(Rising and
Outperform)
WEAKENING
(Falling but
Outperform)

30. How to Use RRG
 Choose your Risk Profile and Match it with your
Strategy
 Then choose stocks whose Sector is in your
preference Sides
 Suggestion :
 Long Term Investor : Lagging Sides
 Medium Term : Improving Sides
 Short Term Trader : Improving or Leading Sides

31. What is “wrong” with RRG ?
 Technically Speaking, RRG Chart is not a normal
Technical Analysis Chart
 Still need a deep research to study how Instruments
rotate from Side to Side
 Until then, Technical Analysis method should not be applied
 However, RRG is a great Coincident Indicators but
should not be employed as Leading Indicators

32. Relative Strength

33. 3 in 1
Relative
Strength
Relative
Comparison
Ratio Chart

34. Ratio Chart of ADHI and JCI

35. Ratio Chart of ASII and JCI

36. Ratio Chart of ACES and JCI

37. Ratio Chart of AB
 Ratio Chart of AB = Divide A with B
 If AB Ratio Chart Rises (Outperform)
 A is Better than B
 Buy A and Sell B
 If AB Ratio Chart Falls (Underperform)
 B is Better than A
 Buy B and Sell A

38. The Original Use
 Relative Strength in Technical Analysis is used by
John Murphy in conducting Intermarket Analysis
 Relative Strength helps us to find Instruments that
are Performing better than other Instruments
 Relative Strength is used in Asset Allocation Strategy

39. Relative Strength in Bloomberg
(Ratio Chart)

40. Steps
 Using function G <GO>
 Create New Charts

41. Ratio Chart of ASII and JCI Index

42. Ratio Chart of CPO and Coal

43. Ratio Chart of JCI and Dow Jones

44. Ratio Chart of Gold and U.S Gov. Bonds 5Yr

45. “Perfect” Indicators

46. What is “Perfect” ?

47. Ask Them “Is There A Perfect Weapon / Tools ?”

48. “Perfect” means ...
 You understand “It” so much that you are able to
maximize “Its” advantages and minimize “Its”
disadvantages
 You choose “It” under every circumstances, even if
you have another options
 “It” is the only thing / one that you Trust

49. Holy Grail
 Holy Grail is a method (indicators, system,
technique, etc) that give you 100% accuracy, 100%
consistent profit and 0% loss
 Holy Grail is not exist !
 There is no Perfect but there is “Perfect”

50. “Perfect” Indicators means ...
 Indicators that you understand so much that you
can Maximize its own Advantages and Minimize
its own Disadvantages
 Indicators that you use for Buy and Sell Signals …
but then you know which are the Best Buy and Sell
Signals … and still you are okay if you make wrong
actions because of those so-called “Perfect”
Indicators of yours

51. Technical Analysis’ Indicators
Indicators
Momentum
Stochastic
Oscillator
RSI
Trend
Following
Moving
Average
MACD
Volume
On Balance
Volume
Volatility
Bollinger Band
Average
Trading Range
Sentiment
Market
Breadth
Advance
Decline
Quantitative
Methods
Standard
Deviation
Linear
Regression
Line

52. My Recommendation
 I believe the best Trading activities lies in Medium
Term Trading; not Short Term Trading or Long Term
Trading (Investing)
 Based on Risk – Reward and Holding Period. MT offer
Higher Profit than ST and Faster than LT
 Investor and Trader can employ Medium Term Trading
 Medium Term Trading in my Technical Analysis
concept can be translated into :
 Buy when Momentum Indicators is Oversold while Trend
Following Indicators is Bullish
 Sell when Momentum Indicators is Overbought while
Trend Following Indicators turns to Bearish (from Bullish)
 That would be : Buy Low – Sell Higher

53. My “Perfect” Indicators
Bollinger Band Stochastic Oscillator
 Type :
 Trend Following Indicators
 Volatility Indicators
 Quantitative Indicators
 Purpose :
 Trend
 Overshoot – Undershoot
(based on Statistical
Method)
 High – Low Volatility
 Type :
 Momentum Indicators
 Purpose :
 Oversold and
Overbought reading
 Timing to Rise or Fall

54. Moving Average
 Moving Average is an averaging method that ‘move’
periodically so it is always the latest average
 MA20 means average 20 days ago
 Since 20 days represents a month, MA20 could also
mean Monthly Average
 If Current Price is above MA20, technically speaking
it means Bullish
 It’s Bullish because Current Price is above Monthly
Average
 Similar parable : MA20 with MoM Rise or Fall, MA60
with QoQ Rise or Fall and MA200 with YoY Rise or
Fall

55. Bollinger Band
 Bollinger Band is a Standard Deviation of its Moving
Average
 Standard Calculation of Bollinger Band is 2SD and -2SD
of MA20
 Statistically Speaking, if Price is below or above 2
(and -2) times its Standard Deviation then it is
beyond ~95% of overall range (normal distribution)
 that’s what I called Overshoot and Undershoot
 If the range between 2SD and -2SD is widening then
the volatility is high, vice versa
 Similar Bollinger Band method often used in PE
Band and PBV band

56. Stochastic Oscillator
 Stochasic Oscillator reads how close Current Price
to its extreme certain period range
 How close is Current Price to (say) 20 last days range of
highest or lowest range
 If Current Price near its Highest Price in 20 last days then
Stochastic Oscillator read an Overbought
 If Current Price near its Lowest Price in 20 last days then
Stochastic Oscillator read on Oversold
 Often, you don’t need to see Stochastic Oscillator to
prove if it is Overbought or Oversold based on
Stochastic Oscillator method

57. The Appearance of My “Perfect” Indicators
Stochastic Oscillator
Modified
Full Method of Bollinger
Band

58. Relative Strength with Technical Analysis

59. Recall : Ratio Chart of ASII and JCI Index

60. Ratio Chart of ASII and JCI Index

61. Ratio Chart of BBCA and JCI Index

62. Ratio Chart of BBCA and Finance Index

63. Ratio Chart of Property and JCI Index

64. The Portfolio Maker

65. Bloomberg Features
 CIX <GO>
 Main menu in order to create index
 CIXB <GO>
 Easier menu to create our own index
 CIX is able to create historical Chart based on the
securities and weighting method (Personal, Equal or
Market Weigth)

66. Cement Index with CIXB <GO>

67. Cement Index Historical Chart

68. Portfolio Charts

69. Making Your Portfolio with CIXB <GO>
 5BIGS : ASII, BBCA, TLKM, UNVR and PGAS

70. 5BIGS (Your Portfolio) Historical Chart

71. Attention
 Historical Chart of Portfolio assumes that the
weighting are consistent with the weighting that you
input in CIX <GO>
 That seems not applicable but then we are looking at
the future
 Assumes that the weighting will not be changed in
the future

72. Ratio Chart of Portfolio Chart

73. What is that ?
 The idea is to combine Relative Strength method
with the Amazingness of Bloomberg which can
create a Portfolio Chart
 We can try to Outperform certain index then why can
not we choose Stocks in our Portfolio that could
Outperform our Portfolio itself using Relative
Strength and Technical Analysis (and Bloomberg)

74. Ratio Chart of ASII and Your Portfolio

75. Ratio Chart of TLKM and Your Portfolio

76. Finding Stocks That Potentially
Outperform Index or Portfolio

77. BBCA and Your Portfolio

78. PGAS and Your Portfolio

79. Conclusion

80. The Main Steps
 Create your Portfolio and Portfolio Chart with CIX
<GO>
 Form a Ratio Chart from Stocks in your Portfolio and
Portfolio Charts
 Apply Technical Analysis to find which Stocks that
will Outperform Portfolio Charts

81. Another Bloomberg Features
 You can look deeper you CIX Chart (Portfolio Chart) with
SEAG <GO> to see how your portfolio react throughout
the time (historically speaking)
 If you create many CIX Charts, you can do Screening
with EQS <GO>
 Which CIX Charts (Portfolio Charts) that are Oversold or Above
Middle Bollinger Band
 You can also do General Check Up your Portfolio using
PORT <GO>
 Is your Portfolio have too much Property stocks or your
Portfolio P/E is above P/E of JCI
 “Backtesting” feature can be used to find what Indicators
(and their parameters) which fit the best for your Portfolio
Chart

82. Any Questions ?

83. Muhamad Makky Dandytra, CSA, CFTe
Working Experiences
 Currently as Junior Investment
Manager at Mandiri Healthcare
 3 year as Technical Analyst at
Trimegah Securities, AmCapital
Indonesia and Anugerah
Securindo Indah
 1 year as Equity Sales at
Danareksa Sekuritas
Certifications
 Certified Financial Technician
(CFTe) from IFTA
 Bronwen Wood Award 2011
from IFTA
 Certified Securities Analyst
(CSA) from SASB Indonesia
 mmdandytra@gmail.com
 (+62) 813 145 45 317
Contact Information