10/04/2016 06:02 AST
: The Dubai Financial Market General Index (DFMGI) managed to end positive last week, up 30.61 or 0.91 per cent to close at 3,386.14. Although not by much, that’s the highest weekly close for the index in 2016.
Four week’s ago the DFMGI ended the week slightly lower at 3,384.63. Volume spiked to a four-week high on the advance, while 24 stocks advanced and 11 declined. Performance has been positive for seven out of the past eight weeks, a sign of underlying strength.
For the past five weeks the DFMGI has been trending sideways within a relative narrow range that’s been developing right around support of the 21-day exponential moving average (ema).
This makes the 21-day a valid indicator for the near-term uptrend and one to watch for future support if the index continues higher — above the 2016 high. The top of the range or resistance is at the 2016 high of 3,420.71, and the low or support is at 3,248. In addition to the positive performance last week, the high of last week’s range was above the prior week and the low was above the prior week’s low.
Resistance area
Resistance of the range is around the long-term trend indicator, the 200-day ema (now at 3,396.15). As of mid-August the index has been below the 200-day ema. This makes it a significant resistance area for the downtrend, and therefore increases the significance of a bullish breakout of the five-week range, as such a move would also provide a breakout above the 200-day. Since the percentage decline off the 2016 high was a relatively mild 5.0 per cent, the chance for an upside breakout is still strong, as this reflects underlying strength in the eleven-week uptrend.
If a bullish breakout occurs, then the next upside targets include 3,468, and then 3,527.
Abu Dhabi
The Abu Dhabi Securities Exchange General Index (ADI) fell slightly by 38.72 or 0.88 per cent last week to end at 4,351.70. Market breadth leant on the bearish side, with 19 declining issues and 15 advancing, while volume improved from the prior week, in the lower range of the past 10 weeks.
Technically, the chance for the ADI to go to new highs for 2016 in the near future is less than for the DFMGI. Since hitting a high of 4,587.7 in early March, the ADI has fallen as much as 7.0 per cent to support (4,264.94) in the area of the 55-day ema (now at 4,295.52), which continues to mark support. The 2016 high marks a formidable barrier as it was also a peak in October that led to a rapid sell-off, and it is now around where resistance of the long-term downtrend resides.
Regardless, it looks like the ADI will test that resistance area and bounce higher off the March low. A move above 4,401 gives the next short-term bullish signal.
If instead the index drops below the March 4,264.94, it heads to the 4,159.6 to 4,140 support zone, which starts with the 50 per cent of the 2016 uptrend, and includes prior resistance and the 200-week ema, and prior resistance, which is now at 4,148.8.
Stocks to watch
Stocks such as Shuaa Capital, Drake and Scull, and National Central Cooling are leading the market higher, having each broken out decisively above both their long-term downtrend lines and their 200-day ema’s recently. Many others, including Emaar Properties, National Bank of Abu Dhabi, Deyaar, and Union Properties have formed or begun to form trend continuation consolidation patterns up against resistance of the 200-day ema.
Eshraq Properties broke out above its 200-day ema in late-February and has been consolidating into a bullish ascending triangle for the past five weeks. That pattern has formed on support of the 21-day ema. Last week Eshraq closed up 2.6 per cent at 0.79. A breakout occurs on a move above 0.82, with the stock then targeting at least 0.92.
Also in late-February, we saw Amlak Finance move above its 200-day ema. Since then it has been forming what is sta
Gulfnews
Please wait...
