TECHNICAL ANALYSIS: QE INDEX AND KEY STOCKS TO CONSIDER
QE Index: Short-Term – Downmove
Al Rayan Islamic Index: Short-Term – Downmove
Gulf International Services: Short-Term – Breakout
The QE Index continued its decline and fell sharply around 242 points
(-2.09%) breaching the important supports of the 21-day moving
average and the 11,400.0 psychological levels in a single swoop. The
index moved higher during the mid-session touching its intraday high
of 11,712.54, but caved under heavy selling pressure suffering the
largest single day loss in the past six months. Traders are likely to
witness further retracement on the back of weak indicators.
The QERI Index penetrated below the key supports of the 21-day
moving average and 3,329.75 in a single trading session after
witnessing a relief rally on Tuesday. The index tagged a new all-time
high, but later plunged around 57 points losing -1.68%. This action
reveals that there is exhaustion on the part of buyers and the index
may continue to witness sustained selling pressure. Meanwhile, both
momentum indicators are exhibiting bearish signals.
GISS cleared the important resistance of QR88.00 and made further
headway on the back of large volumes. Both momentum indicators
are indicating that the stock may continue its advance. Hence, it
appears that the current higher push has enough steam to test and
surpass its resistance at QR91.80, targeting the QR94.0 level. The
interim support is at QR88.0; a drop below this level indicates that
GISS may move down to test the QR85.80 level.
Qatar Islamic Bank: Short-Term – Downmove
National Leasing Holding Co.: Short-Term – Downmove
Vodafone Qatar: Short-Term – Downmove
QIBK penetrated below the supports of the 55-day moving average
and QR74.10 in a single swoop. Moreover, the stock has been sliding
down over the past few days along the descending trendline.
Although the stock is trading close to the QR72.80 level, it is unlikely
that the stock may hold onto this support targeting the QR70.50 level.
In addition, the recent spike in volumes is indicating further weakness
in the stock. Further, both indicators are in downtrend mode.
NLCS has been registering losses over the past few trading sessions
and continued its decline moving below the QR28.50 level. The
significant support area is near the QR27.52 level, where a prior
February 2011 low could provide some relief. However, a dip below
this level may trigger additional selling pressure toward QR27.0.
Meanwhile, both momentum indicators are trending weak, indicating
mounting selling pressure.
VFQS dipped below the support of the 21-day moving average and
continued its slide yesterday. Notably, volumes were also large on the
declines indicating further weakness. The prognosis on this time
frame implies a further downside with the RSI crossing the mid-line in
a bearish manner, while the MACD is providing a negative
convergence. On the downside VFQS may test QR11.44 which is
also in proximity to the 55-day moving average.
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Qatar Exchange Index (QE Index)
Al Rayan Islamic Index (QERI Index)
Masraf Al Rayan (MARK QD)
Commercial Bank of Qatar (CBQK QD)
Doha Bank (DHBK QD)
Qatar Islamic Bank (QIBK QD)*
Qatar International Islamic Bank (QIIK QD)
Qatar Insurance (QATI QD)
National Leasing Holding Co. (NLCS QD)*
Widam Food Co. (WDAM QD)
Al Meera Consumer Goods Co. (MERS)
Industries Qatar (IQCD QD)
Qatar Electricity & Water Co. (QEWS QD)
Gulf International Services (GISS QD)*
Qatari Investors Group (QIGD QD)
Barwa Real Estate Co. (BRES QD)
United Development Co. (UDCD QD)
Ooredoo (ORDS QD)
Vodafone Qatar (VFQS QD)*
Nakilat (QGTS QD)
Milaha (QNNS QD)
Banks and Financial Services
Consumer Goods and Services
*These stocks are today’s suggested ideas
Overall Methodology: The charts and descriptions on Page 1 provide an indicative view of the future direction of the equities mentioned. The table on page 2 has been provided to denote historical movements in certain stocks. The historical trend analysis uses 21- and 55day SMAs for indicating short-term and long-term trends, respectively. Based on these SMAs, the historical direction of the trend is denoted as UP, DOWN or FLAT.
Selection of Key Stocks of the Day: Key stocks’ selection is based on our analysis of 19 members of the QE Index (excludes QNBK QD). Analysis includes identifying trends (short-term as well as long-term), patterns and support/resistance levels.
Trend Direction: The methods used to determine trend direction are subjective in nature. We use 21-day SMA and 55-day SMA, absolute price movements, price movements relative to SMAs and accurately drawn trend lines and chart patterns to determine the short- and
Investment Horizon: The definition of short term and long term depends upon investors’ preferences and their investment objectives. As a rule of thumb, the time horizon for traders/short-term trend is 1-3 weeks while it is 1-3 months for investors/long-term trend.
Combining Technical and Fundamental Analysis: Investors can combine technical analysis (TA) with fundamental analysis (FA) to maximize their investment returns. While the “True Value” of stocks could be estimated by FA, the entry and exit timings could be fine
tuned using technical analysis to benefit from short-term movements in stock prices.
Trading Tactics: The trend direction should be analyzed based on the time-horizon of your investments. In general, investors attempt selling close to resistance levels during a downtrend and attempt buying close to support levels during uptrend.
Simple Moving Average (SMA): A SMA is the average of the closing price of a security for a given period.
RSI (Relative Strength Index): A technical momentum indicator that ranges from 0 to 100 and compares the stock’s recent price movements by evaluating recent gains and losses. Stocks with RSI above 70 could be considered overbought and below 30 could be
considered oversold. If the RSI falls below 70, it is a bearish signal. On the other hand, if the RSI rises above 30 it is considered bullish. We use a RSI of 14 days.
MACD (Moving Average Convergence Divergence): MACD denotes the relationship between two moving averages, which is used to spot changes in strength, direction, momentum and duration of a stock price trend. The MACD is calculated by subtracting the 26-day
exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the signal line, is also plotted on top of the MACD, functioning as a trigger for buy/sell signals. The MACD line above the signal line provides a positive signal and vice versa.
Ahmed M. Shehada
QNB Financial Services SPC
Head of Research
Tel: (+974) 4476 6534
Head of Trading
Tel: (+974) 4476 6535
Head of Sales
Tel: (+974) 4476 6533
Manager - HNWI
Tel: (+974) 4476 6544
Contact Center: (+974) 4476 6666
PO Box 24025
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