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Technical tips (egypt) egx30 march 29, 2012


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Comprehensive Volume Analysis

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Technical tips (egypt) egx30 march 29, 2012

  1. 1. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012EGX30 RIC: .EGX30SIGNIFICANT LEVELS: **VOLUME ANALYSIS SAYS BUY** THEN WHAT? ~~ Hold (Last Price: 5040 pt. ) After yesterday’s weird things, we decided to investigate another area ~~ Aggressive medium-term First Second Third which we think that it will enlighten our way; it’s VOLUME traders can BUY DIPSSupport 4,860 4,800 4,750 “To make money in this business, you need to know whether ~~ Conservative short/ medi- money flows into or out of the market” ~~~~ that what we’re going um term traders can Buy af-Resistance 5,030 5,100 5,190 to do in the next few pages. We’ll start looking inside the hood of ter a decisive up-breakoutStop loss 4,750 4,550 - the engine using classic techniques, then we’ll devote the rest to over 5,060 with heavy vol- comprehensive “volume analysis”. umeTarget 5,480 5,600 5,800 1
  2. 2. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012CLASSIC ANALYSISBOTTOM LINE: INDICATOR DESCRIPTIONTaking out more that 62% of the June/ Dec 2011 decline, thrust in trading activity (above the 200-day The 50– and 200– day EMAs consider theaverage activity), Major golden-crossover between the 50– and 200-day EMAs (the two are diverging), most important moving averages in the stock markets. A golden crossover signalresting on a confluence of significant supports, falling wedge decline structure, declining volume dur- occurs when the 50-day EMA penetratesing the decline (below the 200-day average activity), and thrust in activity with widen ranges indicate over the 200-day EMA. This signal, espe- cially if the two averages are diverging,that; the market is trending up-ward, the market participants were, as we have said before, just taking carries a tremendous major implication.profits, the rally should continue gaining momentum, and taking out the 5,060 level is what short-termtraders need to Long the market again. 2
  3. 3. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012MOVING AVERAGE COVERGENCE DIVERGENCE MACD - EGX30BOTTOM LINE: INDICATOR DESCRIPTIONTwo falling channel materialized in the EGX30 since 2008. a decisive up-breakout over the first was The Moving Average Convergence/the last nail in 2008 bear market coffin, as it was the main bullish confirmation signal to March, 2009 Divergence indicator (MACD) is calculated by subtracting the value of (26-period) expo-bottom. Recurring 2009 structure was our “main secret” that forced us to be bullish on the market at nential moving average from (12-period) ex-early December, 2011. Taking out the second falling channel was everything a technician needs to be ponential moving average. A 9-period dotted exponential moving average (the "signal line")bullish on the market. We see that the MACD approaches a confluence of support from the broken is automatically displayed on top of thefalling channel and from the rising dotted trend line. An up-side bounce is highly expected MACD indicator line. 3
  4. 4. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012ON-BALANCE VOLUME OBVBOTTOM LINE: INDICATOR DESCRIPTIONOne of the most classical tool that sort the volume data according to the price move. A decisive up- On Balance Volume relates volume to price changes. It is calculated by adding the daysbreakout over a declining blue line indicated that a fresh “inflows” was getting into the market. A ris- volume to a cumulative total when the securi-ing trend in the OBV indicates that the market is rising with rising volume. The green median line ab- tys price closes up, and subtracting the days volume when the securitys price closes down.sorbed any decline, so, if the market was declining with heavy volume (and that didn’t happen), this OBV changes precede price changes. Theline will not bear this impact and a down-breakout will be the case, but however, this isn’t a case and theory is that smart money can be seen flow-a bounce is just taking place, screaming that the market is rising with heavy volume. ing into the security by a rising OBV. 4
  5. 5. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012VOLUME RATE-OF-CHANGE V - ROCBOTTOM LINE: INDICATOR DESCRIPTIONThe 2o-day ROC of the Volume wend to the negative area just after the beginning of a decline; that’s The Volume Rate-Of-Change (R.O.C.) indica-bullish knowing that the volume is taking a quick dib to below its reading 20 days ago while the mar- tor is calculated by dividing the volume change over the last x-periods by the volume xket decline. But, however, a lower lows in prices accompanied by higher lows in the indicator indi- -periods ago. The result is the percent bycates that volume’s decline pace is decelerated and that structure if followed by a thrust in Prices which the volume has changed over the last x- periods. If volume is higher today than x-days(over 5,100) and a positive reading in the ROC would signals a beginning of a new up-leg and a sure- ago, the R.O.C. will be a positive number. Iffire buy signal. volume is lower today then x-days ago, the R.O.C. will be negative. 5
  6. 6. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012CHAIKIN MONEY FLOW CHMBOTTOM LINE: INDICATOR DESCRIPTIONFirst of all, the CMF lies over the zero line giving a clear signal that the market is consistently closing It’s based on the premise that the location ofnear the high with increased volume. the close is the key determinant of supply and demand. It considers volume as buying vol- ume when closes near the high and sellingA positive divergence just over the zero line indicates that, although the market is making lower lows, volume materialize when closing price is near the low. CMF is an oscillator that speed up thethe volume is much lower in the current low, than the prior higher low. This also gives a bullish signal signals while keep the efficiency, somehow,that sellers are not willing to accept lower prices. intact. 6
  7. 7. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012POSITIVE & NEGATIVE VOLUME INDEX PVI & NVIBOTTOM LINE: INDICATOR DESCRIPTIONThe PVI (upper line) shows how the market is rising with increased volume, and the lower line NVI PVI & NVI accumulate price based on theshows how the market is falling with decreased volume. It has been said that if the PVI is over its one actions of volume. So the magnitude of the price change, with regard to volume, affectsyear average (253), then the market is 76% bullish, and you can see how the market hovers well over these indicators. Add or subtract to/from theits average. But, it also has been said that the if the NVI is over its one year average, the market is PVI when today’s volume is greater than yes- terday’s volume and add or subtract to/from96% bullish!. So far, the market price/volume relationship is good and will get better in the near fu- the NVI when today’s volume is less thanture. yesterday’s volume 7
  8. 8. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012MARKET FACILITATION INDEX MFIBOTTOM LINE: INDICATOR DESCRIPTIONIncorporating a very short-term volume indicator is important to this study. This indicator shows the The MFI simply divides the days range (highrelation between price ranges and volume. At March 26 and today the indicator signaled a “SQUAT” to low) by the total volume. The result shows the efficiency of price movement by quantify-bar. Yet this isn’t bullish signal, but if the market closed over yesterday’s high (5,040) it will be so, as ing the price movement per unit of volume. Itvacillation price movement with increase in trading activity always put the current trend under a stress compares volume changes with range changes and produce a workable trading systems.test and this bar always occur prior to important reversals. So a close over 5,040 is a must to negatethe bars bearish implications. 8
  9. 9. TECHNICAL TIPS (EGYPT) JAZIRA SECURITIES BROKERAGE Thursday, March 29, 2012 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 Please contact our customer Service representatives for further information..JSB Contacts Title Land Line Mobile EmailHussein El Sawalhy, CFA Managing Director (+202) 3760 9915 +20100 1410 690 helsawalhy@jaziracapital.comAhmed Helmy Head of Sales & Trading (+202) 3760 9915 +20100 1004 482 ahelmy@jaziracapital.comRamy Rashad, CMT Senior Technical Analyst (+202) 3760 9973 +20100 8385 501 rrashad@jaziracapital.comMomen El-Shayal Technical Analyst (+202) 3760 9983 +20100 7678 545 frefaat@jaziracapital.comGeorge Mansour Customer Service (+202) 3760 9941 +20122 9214 069 gmansour@jaziracapital.comDoaa Osman Customer Service (+202) 3760 9941 +20122 7552 436 dosman@jaziracapital.comBasant Soror Online Trading Technical Support (+202) 3760 9941 +20122 1615 409 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 . 9