TECHNICAL ANALYSIS: QE INDEX AND KEY STOCKS TO CONSIDER
QE Index: Short-Term – Neutral
Al Rayan Islamic Index: Short-Term – Neutral
Qatar Islamic Bank: Short-Term – Breakout
The QE Index continued its rally and rose around 14 points (0.13%)
tagging another new 52-week high. However, the index reversed
from its day’s high of 10,867.57 as there was exhaustion on the part
of buyers. This action reveals that the index may consolidate or
decline before its next upmove. Traders may need to keep a close
watch on 10,748.19 for support. Conversely, the index needs to
move above the ascending trendline for continuation of the rally.
The QERI Index failed to clear the ascending trendline resistance and
witnessed a decline around (-0.51%) after a good run over the past
few days. Meanwhile, the index developed a bearish engulfing candle
pattern, which is a negative signal. The index is currently trading close
to its immediate support of 3,151.22. Any dip below this level may
further drag the index and test 3,123.0. However, if the index clings
on to 3,151.22, it could proceed ahead.
QIBK breached the resistances of QR72.30 and QR74.0 for the first
time since January 2013 in a single swoop. Notably, volumes were
also large on the breakout. We believe this strong breach of
resistances has bullish implications and provides an upside target of
QR75.0. In addition, QIBK has support for a further higher move from
the RSI and the MACD lines, which are in uptrend mode. However,
any dip below the QR74.0 level may indicate a false breakout.
Doha Bank: Short-Term – Breakout
Qatar Electricity & Water Co.: Short-Term – Pullback
Barwa Real Estate Co.: Short-Term – Pullback
DHBK surpassed the resistances of QR61.95 and the ascending
trendline around QR62.30, tagging a 52-week high yesterday. The
stock has been gaining strength over the past few days and may
continue to advance tagging a new 52-week high. Moreover, the RSI
is trending strongly in the overbought territory, while the MACD is
widening away from the signal line in a bullish manner, thus
supporting our positive technical outlook for the stock.
QEWS penetrated below the support of QR180.0 and developed a
bearish Marubozu candle pattern, which usually indicates a likely
correction from the current level. The stock has been consolidating
near QR180.0 over the past few days and eventually moved lower.
We believe the stock may decline and test QR177.20 as it has little
support until then. Meanwhile, the RSI is heading down. However, a
close above QR180.0 may attract buyers.
BRES failed to make any further headway above QR31.60 and
dipped below the support of QR31.20 yesterday. Moreover, the stock
developed a bearish engulfing candle pattern indicating that the stock
may further drift down. Although the stock is trading close to its
immediate support of QR30.85, we believe it may not hold on to it and
move lower to test the 21-day moving average (currently at QR30.52).
The RSI has shown a bearish divergence indicating weakness.
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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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