Global rally drives UAE markets

The exchanges in the UAE continue to show bullish signs as well as the major international indices. It does seem that the positive sentiment seen worldwide is also being felt in the UAE.

Both the Dubai Financial Market General Index (DFMGI) and Abu Dhabi Securities Exchange General Index (ADI) had decent moves last week with the DFMGI up 66.58, or 3.8 per cent, to close at 1,818.34, and the ADI gaining 89.64, or 3.3 per cent, to close at 2,800.81.

Volume improved 70 per cent on the DFMGI and only 17 per cent on the ADI. However, the number of advancing issues versus declining was clearly stronger in Abu Dhabi with 32 issues advancing and only 9 declining, for a 3.5:1 ratio. Dubai saw 19 issues advance and 11 decline, a 1.7:1 ratio.

The DFMGI saw a good move on July 26 and spent the rest of the week seeing mild profit taking right in the area of the 100 period exponential moving average (see lower curved line in chart). Sellers could not move the market down much though and the DFMGI continues to be set up nicely for a further move up.

A key support level to watch on the downside is 1,728.69, the low made July 23. The DFMGI maintains its bullish stance as long as it stays above that level.

On the upside, a break through resistance of 1,855.75 confirms that the recent uptrend started on July 13 is continuing. After that the next area of possible resistance is around 1,909, which is a 50 per cent retracement of the downtrend begun on June 14. The first sign of strengthening is a move through the high of Thursday, 1,829.43.

The biggest gainer of the week was Union Properties, up Dh0.11 or 11.6 per cent to close at Dh1.06 on a 200 per cent gain in volume over the previous week. It closed strong on Thursday and should see more strength to the upside this week.

Following close behind was Aramex, up Dh0.15 or 10 per cent, closing the week at Dh1.65. Aramex has held strong over the past couple weeks but looks like it may have gotten a little ahead of itself and could see some choppiness and a bit of profit taking. It has now retraced 38 per cent of its drop started November 2007.

The third biggest gainer of the week was Dubai Financial Market Company, improving Dh0.15, or 9.6 per cent to close at Dh1.72. Buyers are likely to continue to come into this stock this week.

The ADI has been pretty much going up for the past 12 days, ever since finding a bottom in mid-July. That's a lot of days up before seeing profit taking or taking a rest. The move has been steady with lots of small moves.

It seems to be heading right for resistance of the 200 period exponential moving average (upper curved line in chart) and the lower side of the uptrend line, around 2,879. The first support area of note is 2,682.

It wouldn't be surprising to see some profit taking come into the market soon. However, with the bullish follow through in the US and other international markets at the end of last week, we could see a further move up in the ADI first.

The biggest gainer of the week was the National Bank of Abu Dhabi, up Dh2.60, or 23.1 per cent, to close at Dh13.85. Volume increased 121 per cent over the previous week. This stock has been very strong over the past couple weeks, up each of the past 12 trading days, and closed at the highs for last week on strong volume. However, at this point the likelihood of some profit taking and a retracement are very high.

The next largest gaining stock was International Fish Farming, improving Dh3.75, or 19.6 per cent to close at Dh22.9. This is a relatively volatile and low volume stock and should be approached with caution, particularly in the short term.

National Marine Dredging was the third best gainer of the week. It is also infrequently trading and with low volume. This stock gained Dh0.87, or 14.1 per cent, to close at Dh7.04.

Ajman Bank looks poised to continue its upward momentum. Look for a move through Dh1.11.

Shuaa Capital is sitting near resistance of Dh1.60 hit over three days recently. A break through that price level signals strengthening.

Arabtec is also sitting close to resistance of Dh2.81 and could see a move through that level soon. A break through Dh2.82 in Emaar Properties, signals a further move to the upside.

Emirates Foodstuff and Mineral Water is still looking strong and can be watched for a good entry price.

Watch Dana Gas for a break through resistance at Dh1.17 as a sign of strengthening.

Dana Gas did break out of its bullish symmetrical triangle consolidation pattern then settled down for the week in short consolidation. It's now setup nicely to follow through strong to the upside and continue its uptrend.

Abu Dhabi Aviation Company is looking strong. Watch for a move through Dh3.44 on improving volume.

As mentioned before, Methaq Takaful Insurance has been consolidating for almost the past two months. It has now created a symmetrical triangle bullish formation where a breakout price can be identified as Dh5.58. A move through that level with higher volume could see this stock continue its strong uptrend started mid-May. Don't jump the gun trying to get in too early, as the possibility of a move to the downside also exists.

Al Dar Properties is also holding strong. Watch for a good entry price. Also, RAK Properties is looking good, with a move through short term resistance of Dh0.75 a sign of buying coming into the stock.

- Bruce Powers is Senior Vice-President of Arab Capital Markets Resource Centre, Dubai.

Disclaimer: Stock market investments are risky and past performance does not guarantee future results. Gulf News does not accept any liability for the results of any action taken on the basis of the above information.