27/05/2018 08:52 AST

The Dubai Financial Market General Index (DFMGI) was up 22.87 or 0.79 per cent last week to end at 2,954.46. There were 27 advancing issues and 10 declining, while volume reached a 16-week high.

Although it’s still early, the index continues to show constructive action towards establishing a bottom that could lead to further upside in the relatively near-term. Recent patterns in price are starting to change. For the first time in 18 weeks the index ended the week above the prior week’s high and last week was the first time since January that the index was up two weeks in a row. Further, last week’s close was the highest weekly close in four weeks.

Next, we need to see further signs of strength. This first sign occurs on a daily close above last week’s high of 2,977.63, and then on a daily close above the three-week high of 2,985.33. The three-week high is more significant particularly since the two and three-week highs are so close together. Once there is a daily close above the three-week high short-term weakness can be used to build positions as the chance that at least a temporary bottom has been reached has improved. At that point the DFMGI will also be above its 18-week downtrend line, another sign of strength. If the DFMGI can continue higher from there then a major potential resistance zone from around 3,195 to 3,264 becomes a primary target. It could take a little time to get there though.

Nonetheless, if sellers again take over and last week’s low of 2,897.86 is exceeded to the downside the a break below the trend low of 2,870.07 becomes possible. The next potential support area would then be around 2,851 to 2,836.

Abu Dhabi

Last week the Abu Dhabi Securities Exchange General Index (ADI) had its biggest week in over a year, rising 169.38 or 3.82 per cent to close at 4,601.09. Market breadth was even with 15 advancing and 15 declining issues, while volume was slightly above the prior week. The sharp rise seen in the ADI last week showed signs of trend reversal as the highs of the prior two weeks were exceeded to the upside, last week’s close was above the prior two week highs, and the week ended near the high of 4,609.20.

Nevertheless, there is more progress to be made as it is not yet clear that the index can keep going in the short-term at this point. Last week’s high was right at resistance of the intermediate-term uptrend line and essentially matched the peak resistance zone from August 2017 at 4,608.92. In addition, a 61.8 per cent Fibonacci retracement of the most recent short-term downtrend was reached at 4,604.70. Based on Fibonacci ratio analysis that would be a price area where some degree of resistance could be found. If the ADI can keep going above last week’s high then the 4,651 area is where some resistance could be seen next, followed by the recent peak of 4,721.62.

The volatility of the past four months or so provides a relatively wide range of consolidation that the index can continue to fluctuate within, with a high around 4,721.62 and a low around the two-week low of 4,414.00.

On a daily basis, last week’s low of 4,415.55 along with the two-week low created a bullish double bottom trend reversal pattern. That pattern triggered last week on a move above 4,506.56. What it means now is that the two-week low seems solid and has a good chance of holding for the near-term if not much longer.

Stocks to watch

Since hitting a record high of 4.57 in July 2017 Damac Properties has been falling. It hit a low of 2.17 two weeks ago and at that point was 52.5 per cent below the 2017 peak. The Relative Strength Index (RSI) momentum indicator was at an historical low extreme oversold reading of 20.8 at that low. Now, as of last week, there are the first signs of a potential bottom and hope for a reversal.

Last week Damac was up 0.14 or 6.19 per cent to close at 2.40. Volume, a measure of enthusiasm, jumped to a 10-week high on the rally. There is now the beginning pattern of a weekly uptrend as last week’s high was above the prior week’s high and the low above the previous weeks low. In addition, the week ended strong, in the top quarter of the high-to-low range for the period, while last week’s close was the highest in four weeks.

The next confirmation of strength is given on a daily close above last week’s high of 2.42. Potential resistance is then close by around 2.48 to 2.51. If a daily close can occur above 2.51 the next target zone around 2.88 to 2.97 has a good chance of being reached.

Of course, a decline below last week’s low of 2.26 is a sign of weakness, and it puts the recent low of 2.17 at risk of at least being tested as support. Although not necessary, some consolidation around the recent lows would be healthy to help establish a solid bottom for Damac. Bruce Powers, CMT, is a technical analyst and global market strategist.


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Ticker Price Volume
DSI 0.37 0
SABIC 119.00 3,097,278
SAICO 11.48 1,245,614
STC 80.90 227,141
ARCCO 23.60 285,754
BURUJ 24.50 139,049
EEC 16.64 1,313,294

ADX 5,055.45 34.28 (0.68%)

Market
Dividend Yield (%)
P/E
Price/BookValue
Performance
  • 1-Month
  • 3-Month
  • 1-Year
Volume Change
  • 10D Avg Vs 90D Avg
Index vs...
  • 52-w high
  • 50-day moving avg.
  • 200-Day Moving Avg
Ticker Price Change
ADIB 4.05 -0.01 (-0.25%)
FAB 14.80 0.10 (0.68%)
ADCB 8.19 0.17 (2.11%)
CBI 0.70 -0.01 (-0.85%)
UNB 4.80 -0.03 (-0.63%)

DFM 2,778.76 2.38 (0.09%)

Market
Dividend Yield (%)
P/E
Price/BookValue
Performance
  • 1-Month
  • 3-Month
  • 1-Year
Volume Change
  • 10D Avg Vs 90D Avg
Index vs...
  • 52-w high
  • 50-day moving avg.
  • 200-Day Moving Avg
Ticker Price Change
EIB 9.99 0.00 (0.00%)
EMIRATESNBD 9.29 0.00 (0.00%)
EMAAR 4.90 -0.01 (-0.21%)
DIB 5.29 0.04 (0.76%)
EMAARMALLS 1.93 0.03 (1.57%)
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