Stock call .egx30 (thorough price and momentum analysis) nov 15, 2011

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  • 1. STOCK CALL JAZIRA SECURITIES BROKERAGE Tuesday, November 15, 2011EGX30 RIC: .EGX30THOROUGH PRICE AND MOMENTUM ANALYSISIt’s always helpful to start any chart analysis with a purelook to a “pure price action”, and then add whatever youwant to chart in order to complete your “weight-of-evidence” approach. We’ll begin with a thorough investiga-tion to the price action using classic chart techniques, andthen we’ll turn our attention to Momentum Analysis; we’lllook at the RSI and MACD indicators from completely dif-ferent side of view.The upper blue declining resistance line in a falling majorchannel connects two swing highs; the tip of the famous2008 H&S topping pattern and the third swing high in awide lateral action (upper rectangle). The lower line is justthe most important declining support line in the chart. Itgains such important from its degree of steepness and alsofrom being tested more than ten times!!The index has fulfilled the minimum targets of both rectan-gles, found a confluence of support from two different de-gree of trend lines; the mentioned major declining supportline and the slightly steep, short-term, declining dark bluetrend line, held firm over the major support level; March2009 bottom, and thrust violently to the opposite side of thefalling channel, successfully penetrated the intermediatedeclining trend line, and after a handful of bullish sessions,the index started to level off showing a characteristics of apossible bottom formation. Continue... 1
  • 2. STOCK CALL JAZIRA SECURITIES BROKERAGE Tuesday, November 15, 2011EGX30 RIC: .EGX30Continued…As the RSI is very helpful in Range Analysis, it offers one of the most important signals inTrend Determination approach as it fly in different ranges in compliance with the price’strends. The Bull Range (blue lines) defined the mid-2006/2007 bull market. As the indexwas heading to the tip of the Head in 2008 H&S topping pattern, the RSI failed to contin-ue all the way up to the upper bull resistance line, giving an early signal of a possible dete-rioration before a plain decisive down-breakout in June 19, 2008 take place. The BearRange (red lines) defined the 2008 bear market. A failure to test the bearish support linehas followed by a thrust over a bearish resistance line giving again an early signal of pos-sible stellar advance. While the index was oscillating in a wide lateral action, the RSI alsowas oscillating in a range between bull and bear ranges (green lines). The right side of thechart shows how the RSI is resting well over a bearish red support line indicating that acontinuation of a bear market, under current circumstances, isnt a possible scenario. How-ever, we still need a thrust to either a sideway range resistance line or a bull range re-sistance to be able to announce that; “given a worst scenario, the index will continue totrend laterally”. A multiple positive divergences has followed by a decisive up-breakoutover a declining trend line in the RSI. So far, it seems that the indicator is just pullingback to the breakout level.The MACD form mid-2009 till now is taking a bearish status, falling in a well structureddeclining channel. While the index begun a second round of a decline, the MACD refusedto continue all the way down to the lower declining support line, formed a small doublebottom pattern and successfully penetrated its neckline. This “Partial decline” signal maygive an early signal that the MACD will take out this falling channel heading to the clearzone. “Taking out the declining resistance line in the MACD indicator considers a majorchange in the structure and will force the index to still higher prices”.BOTTOM LINE: (Last Price: 4,177 pt.) Taking out a slanting declining line (thickbrown line) in the price chart (4,400/4460) signals a beginning of a sustainable rally to at least5,800. So far, we’re bullish on the market and dont mind an Accumulation strategy at current lev-els or even slightly lower, but however, we’ll be “extremely bearish” if the index made its mind tothreaten the mentioned moving support line (below 3,800). For the conservative investors(((favorable))), you are advised to pick up from a long side-buying strongly with your both hands–after a decisive up-breakout over 4,460. 2
  • 3. STOCK CALL JAZIRA SECURITIES BROKERAGE Tuesday, November 15, 2011 Jazira Securities Brokerage Jazira Securities Online Trading 15 Shooting Club Street, Mohandessin You can trade online through Jazira Securities online Tel: (+202) 3760 9983 - 37609941 trading portal ... Fax: (+202) 3760 9883 www.jaziracapital.com Please contact our customer Service representatives for further information..JSB Contacts Title Land Line Mobile EmailHussein El Sawalhy, CFA Managing Director +202 2578 0931/2 +20100 1410 690 helsawalhy@jaziracapital.comAhmed Helmy Head of Sales & Trading +202 2576 0188 +20100 1004 482 ahelmy@jaziracapital.comMohamed Fahmy Head of Research +202 2578 0931/2 +20122 2157 312 mfahmy@jaziracapital.comRamy Rashad, CMT Senior Technical Analyst +202 2578 09 31/2 +20100 8385 501 rrashad@jaziracapital.comBasant Soror Online Trading Technical Support +202 2578 09 31/2 +20122 1615 409 bsoror@jaziracapital.comGeorge Mansour Customer Service +202 2578 09 30 +20122 9214 069 gmansour@jaziracapital.comDoaa Osman Customer Service +202 2578 09 30 +20122 7552 436 dosman@jaziracapital.com Disclaimer  Jazira Securities Brokerage (JSB) is a licensed Egyptian Stock Market Broker, regulated by the Egyptian Financial Service Authority.  Opinions, estimates and projections contained in the research reports or documents are of the author as of the date published and are subject to change without notice  JSB research reports or documents are not, and are not to be construed as, an offer to sell or solicitation of an offer to buy any securities.  Unless otherwise noted, all JSB research reports and documents provide information of a general nature and do not address the circumstances of any particular investor.  Neither JSB nor its mother company (Jazira Capital), or any of its affiliates accept liability whatsoever for any investment loss arising from any use of the research reports or their contents.  The information and opinions contained in JSB research reports or documents have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness.  JSB, Jazira Capital or any of its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent.  JSB research reports and all the information opinions and conclusions contained in them are protected by copyright.  The research reports or documents may not be reproduced or distributed in whole or in part without express consent of JSB Research.  JSB research reports or documents, recommendations and information are subject to change without further notice . 3