monthly technical report - Aljazira Capital
MONTHLY TECHNICAL REPORT
- CFTe1
July 11, 2017
This report is intended to present a general view for the market, equities and commodities subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, no information in this analysis should be considered as being business, financial and legal advice.
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: Expectations of the end of profit taking at levels between 7175 - 7080 points, then the completion of the upward trend towards levels of 7750 points.
Technical Summary The index closed at 7230 points. General Trend/weekly: the Saudi market managed to penetrate the Falling wedge pattern, after six months of horizontal movement in a narrow range, where the news of the inclusion of the Saudi market index in the watch list of emerging markets index (MSCI) last June, was the most important news in support of the breakthrough the pattern.
Daily Movement
Source: Bloomberg
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•
While the negative oil price movement continues to exert an effective pressure on the market index during the previous period, which we expect to its movement correlation to TASI may decline due to the quarterly results during the 2Q17. It is likely that, under the current technical indicators, the profit taking of the index will end between 7175 7080 points, then we expect a completion of the upside move again to the expected levels at 7750 points.
•
Furthermore, the RSI index was able to exceed 50 levels with the break of the previous horizontal track, while the weekly moving averages are positively crossed, which may contribute to increase purchasing pressure during the coming period.
Estimations: The outlook remains positive over the medium term after penetrating the previously mentioned horizontal path. The current profit taking likely to end between 7175 - 7080 levels and then return to complete the main upward trend towards the resistance levels for the next period at 7290 - 7750 points, respectively.
2
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Tadawul; Monthly Index: As we had previously predicted, the index
was able to close above the monthly level 7075 points for the first time in six months, amid support for the positive crossing of monthly moving averages.
Technical Summary The index closed at 7425 points /June 2017.
Positive averages crossings
Source: Bloomberg
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General Trend/ Monthly: the index managed to overcome the resistance levels of 7075 after almost six month that represents (38.2% Fibonacci) from the last downtrend, and successfully closing the top of it in last June. Where the monthly close above the mentioned level was an important factor for ending the horizontal path and completing the upward path again. The index remains strongly supported by the positive cross of the major monthly averages at 7000 points. • We also expect that high liquidity with simultaneous Breakthrough was a confirmation signal to end the horizontal path and start a new bullish path. On the medium term, the general perspective remains positive as the market was capable to hold its important monthly averages. Where we expect the strength of the bullish moves to be tied to the current quarterly results. • The MACD indicator trends positively after crossing the signal line, which may increase buying pressures after testing the important monthly averages during last June. It is also possible that the positive interactions of the main monthly averages provide market momentum on the medium term, so that the interactions area becomes an important support level unlikely to be broken.
Estimations: It is likely that the level of 7075 points continue as a main support level for a later uptrend. We also believe that holding above a monthly average of 7075 points would provide an uptrend towards resistance levels 7610 - 8150 points.
3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Oil Brent: Weakness in oil technical indicators and the possibility of resuming profit taking at least to USD 42.70. Weekly movement
Technical Summary The index closed at USD 47.92/ June 2017. General Trend/ Monthly: Although the Brent crude was able to consolidate in June above SMA levels for 20 months at USD 47.50 per barrel, most of the technical indicators tend to toward weakness which raises expectations of a resumption of profit taking for the coming period. Where prices were affected by the increase in supplies of US shale oil as well as increase supplies from OPEC to the highest levels this year after the increase in production of both Libya and Nigeria. The Brent index currently failed to consolidate above its most significant monthly averages (20 months – red line) for the first time since last November. •
•
•
Monthly movement Major support level USD 46.40
We also expect that any weekly close below USD 46.40 (38.2% Fibonacci) may raise cautionary signals and add more selling pressure to retreat maximum towards USD 39. Although the monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicates high levels of concern on oil movement for the short term ahead. Weekly movement: The index failed to hold above the ascending channel which represents (38.2% Fibonacci ) of the last bullish wave. Short-term outlook for Oil price movement remains negative after breaking the weekly bullish trend (See chart).
Estimations: The outlook remains cautious until price hovers above $51.0, with a weekly close. It is estimated to fall below $46.40 towards the main support levels at $42.70 - $39.0. The main resistance levels remains at $51.0 and $54.7 consecutively.
Source: Bloomberg
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4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Gold / Weekly: Gold failed to penetrate the current technical pattern (Head and shoulders), which indicate a possibility to continue the bearish trend on the short-term towards $1189.
Technical Summary The index closed at USD1208 per ounce.
Weekly movement Fail breaking zone
General Trend/ Weekly: the Gold price index failed to penetrate the technical pattern indicated in the chart (Inverse Head and Shoulders) at $1295/Ounce. It coincided with the Federal rate hike during mid-June, which negatively affected the Gold movement. •
•
The weekly RSI indicator returned to trend lower breaking the 50 level, thus raising expectations of a bearish trend on the short-term. For the mean time, we expect indirect pressure to the movement of Gold due to strong expectations of a third interest rate hike during the year. General Trend/ Monthly: the index trended below the 20-month average at $1230 for the first time since it crossed it during January 2017. We also expect that a continued monthly movement below $1230 will add more pressure to Gold.
Estimations: With the current technical data, and after failing to break the neckline above $1295, indicators point towards support levels at $1189 - $1164 respectively. The most important resistance levels for the weekly movement continue at $1210 - $1230. Source: Bloomberg
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5
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
THE USD INDEX: Our expectations indicate an end to the bearish trend soon, exceeding 96.50 point with weekly close would be a confirmation sign.
Technical Summary The USD index closed at 96.0 points General Trend/ Weekly: the dollar index continued to trend lower after failing to preserve its horizontal movement in the bearish wedge pattern (See chart), to record the lowest level in 7 months, as the index broke the previously mentioned area at 98.70 points with the weekly close below it, which was considered an important support area. The dollar index continued to moved under the negative intercepts of the weekly averages, which adds some pressure on the movement of the dollar during the coming period until it overcomes these negative intercept. Our estimations indicate a possible end of the bearish wave close to the current levels. •
Breaking Area
Expected inverse area •
The US$ index received preceding support after the Federal Reserve raised the interest rate last month (June 2017) contrary to expectations. While expectations indicate a third interest rate hike during the year 2017, in light of better than expected employment data during June United States. We also note that the US Federal Reserve raised the interest rate by 0.25% in mid-June to reach 1.0% to 1.25%, which in turn supported the movement of the dollar during the current period. Weakness factors on the weekly MACD indicator are clear after trending below the index line; however, better weekly candlesticks movement could improve later movement for MACD index.
Estimations: Our estimates indicate a close end of the bearish trend targeting a maximum of 94.70 point. Breaking above 96.50 with weekly close could end any further lows to start a bullish trend towards 97.80 - 99.10 points.
Source: Bloomberg
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6
SAUDI TECHNICAL WEEKLY 23 November 2014
Research Division
Acting Head of Research
Analyst
Analyst
Talha Nazar
Jassim Al-Jubran
Muhanad Al-Odan
+966 11 2256250
+966 11 2256248
+966 11 2256115
[email protected]
[email protected]
[email protected]
Analyst Analyst Sultan Al Kadi Waleed Al-Jubayr +966 11 2256374 +966 11 2256146 [email protected] [email protected]
Brokerage And Investment Centers Division
General Manager - Brokerage Division
AGM-Head of international and institutional brokerage
Mr.Ala’a Al-Yousef
LuayJawad Al-Motawa
+966 11 2256000
+966 11 2256277
[email protected]
[email protected]
Regional Manager - West and South Regions
Sales And Investment Centers Central Region Manager
Mansour Hamad Al-Shuaibi +966 12 6618443
[email protected]
Sultan Ibrahim AL-Mutawa +966 11 2256364 [email protected]
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
Area Manager –Qassim & Eastern Province Abdullah Al-Rahit +966 16 3617547
[email protected]
7
SAUDI TECHNICAL WEEKLY 23 November 2014
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by AlJazira Capital from sources believed to be reliable, but AlJazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
8
- CFTe1
July 11, 2017
This report is intended to present a general view for the market, equities and commodities subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, no information in this analysis should be considered as being business, financial and legal advice.
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: Expectations of the end of profit taking at levels between 7175 - 7080 points, then the completion of the upward trend towards levels of 7750 points.
Technical Summary The index closed at 7230 points. General Trend/weekly: the Saudi market managed to penetrate the Falling wedge pattern, after six months of horizontal movement in a narrow range, where the news of the inclusion of the Saudi market index in the watch list of emerging markets index (MSCI) last June, was the most important news in support of the breakthrough the pattern.
Daily Movement
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
•
While the negative oil price movement continues to exert an effective pressure on the market index during the previous period, which we expect to its movement correlation to TASI may decline due to the quarterly results during the 2Q17. It is likely that, under the current technical indicators, the profit taking of the index will end between 7175 7080 points, then we expect a completion of the upside move again to the expected levels at 7750 points.
•
Furthermore, the RSI index was able to exceed 50 levels with the break of the previous horizontal track, while the weekly moving averages are positively crossed, which may contribute to increase purchasing pressure during the coming period.
Estimations: The outlook remains positive over the medium term after penetrating the previously mentioned horizontal path. The current profit taking likely to end between 7175 - 7080 levels and then return to complete the main upward trend towards the resistance levels for the next period at 7290 - 7750 points, respectively.
2
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Tadawul; Monthly Index: As we had previously predicted, the index
was able to close above the monthly level 7075 points for the first time in six months, amid support for the positive crossing of monthly moving averages.
Technical Summary The index closed at 7425 points /June 2017.
Positive averages crossings
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
General Trend/ Monthly: the index managed to overcome the resistance levels of 7075 after almost six month that represents (38.2% Fibonacci) from the last downtrend, and successfully closing the top of it in last June. Where the monthly close above the mentioned level was an important factor for ending the horizontal path and completing the upward path again. The index remains strongly supported by the positive cross of the major monthly averages at 7000 points. • We also expect that high liquidity with simultaneous Breakthrough was a confirmation signal to end the horizontal path and start a new bullish path. On the medium term, the general perspective remains positive as the market was capable to hold its important monthly averages. Where we expect the strength of the bullish moves to be tied to the current quarterly results. • The MACD indicator trends positively after crossing the signal line, which may increase buying pressures after testing the important monthly averages during last June. It is also possible that the positive interactions of the main monthly averages provide market momentum on the medium term, so that the interactions area becomes an important support level unlikely to be broken.
Estimations: It is likely that the level of 7075 points continue as a main support level for a later uptrend. We also believe that holding above a monthly average of 7075 points would provide an uptrend towards resistance levels 7610 - 8150 points.
3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Oil Brent: Weakness in oil technical indicators and the possibility of resuming profit taking at least to USD 42.70. Weekly movement
Technical Summary The index closed at USD 47.92/ June 2017. General Trend/ Monthly: Although the Brent crude was able to consolidate in June above SMA levels for 20 months at USD 47.50 per barrel, most of the technical indicators tend to toward weakness which raises expectations of a resumption of profit taking for the coming period. Where prices were affected by the increase in supplies of US shale oil as well as increase supplies from OPEC to the highest levels this year after the increase in production of both Libya and Nigeria. The Brent index currently failed to consolidate above its most significant monthly averages (20 months – red line) for the first time since last November. •
•
•
Monthly movement Major support level USD 46.40
We also expect that any weekly close below USD 46.40 (38.2% Fibonacci) may raise cautionary signals and add more selling pressure to retreat maximum towards USD 39. Although the monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicates high levels of concern on oil movement for the short term ahead. Weekly movement: The index failed to hold above the ascending channel which represents (38.2% Fibonacci ) of the last bullish wave. Short-term outlook for Oil price movement remains negative after breaking the weekly bullish trend (See chart).
Estimations: The outlook remains cautious until price hovers above $51.0, with a weekly close. It is estimated to fall below $46.40 towards the main support levels at $42.70 - $39.0. The main resistance levels remains at $51.0 and $54.7 consecutively.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
Gold / Weekly: Gold failed to penetrate the current technical pattern (Head and shoulders), which indicate a possibility to continue the bearish trend on the short-term towards $1189.
Technical Summary The index closed at USD1208 per ounce.
Weekly movement Fail breaking zone
General Trend/ Weekly: the Gold price index failed to penetrate the technical pattern indicated in the chart (Inverse Head and Shoulders) at $1295/Ounce. It coincided with the Federal rate hike during mid-June, which negatively affected the Gold movement. •
•
The weekly RSI indicator returned to trend lower breaking the 50 level, thus raising expectations of a bearish trend on the short-term. For the mean time, we expect indirect pressure to the movement of Gold due to strong expectations of a third interest rate hike during the year. General Trend/ Monthly: the index trended below the 20-month average at $1230 for the first time since it crossed it during January 2017. We also expect that a continued monthly movement below $1230 will add more pressure to Gold.
Estimations: With the current technical data, and after failing to break the neckline above $1295, indicators point towards support levels at $1189 - $1164 respectively. The most important resistance levels for the weekly movement continue at $1210 - $1230. Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
5
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL July 11, 2017
WEEKLY
23 November 2014
THE USD INDEX: Our expectations indicate an end to the bearish trend soon, exceeding 96.50 point with weekly close would be a confirmation sign.
Technical Summary The USD index closed at 96.0 points General Trend/ Weekly: the dollar index continued to trend lower after failing to preserve its horizontal movement in the bearish wedge pattern (See chart), to record the lowest level in 7 months, as the index broke the previously mentioned area at 98.70 points with the weekly close below it, which was considered an important support area. The dollar index continued to moved under the negative intercepts of the weekly averages, which adds some pressure on the movement of the dollar during the coming period until it overcomes these negative intercept. Our estimations indicate a possible end of the bearish wave close to the current levels. •
Breaking Area
Expected inverse area •
The US$ index received preceding support after the Federal Reserve raised the interest rate last month (June 2017) contrary to expectations. While expectations indicate a third interest rate hike during the year 2017, in light of better than expected employment data during June United States. We also note that the US Federal Reserve raised the interest rate by 0.25% in mid-June to reach 1.0% to 1.25%, which in turn supported the movement of the dollar during the current period. Weakness factors on the weekly MACD indicator are clear after trending below the index line; however, better weekly candlesticks movement could improve later movement for MACD index.
Estimations: Our estimates indicate a close end of the bearish trend targeting a maximum of 94.70 point. Breaking above 96.50 with weekly close could end any further lows to start a bullish trend towards 97.80 - 99.10 points.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
6
SAUDI TECHNICAL WEEKLY 23 November 2014
Research Division
Acting Head of Research
Analyst
Analyst
Talha Nazar
Jassim Al-Jubran
Muhanad Al-Odan
+966 11 2256250
+966 11 2256248
+966 11 2256115
[email protected]
[email protected]
[email protected]
Analyst Analyst Sultan Al Kadi Waleed Al-Jubayr +966 11 2256374 +966 11 2256146 [email protected] [email protected]
Brokerage And Investment Centers Division
General Manager - Brokerage Division
AGM-Head of international and institutional brokerage
Mr.Ala’a Al-Yousef
LuayJawad Al-Motawa
+966 11 2256000
+966 11 2256277
[email protected]
[email protected]
Regional Manager - West and South Regions
Sales And Investment Centers Central Region Manager
Mansour Hamad Al-Shuaibi +966 12 6618443
[email protected]
Sultan Ibrahim AL-Mutawa +966 11 2256364 [email protected]
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
Area Manager –Qassim & Eastern Province Abdullah Al-Rahit +966 16 3617547
[email protected]
7
SAUDI TECHNICAL WEEKLY 23 November 2014
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by AlJazira Capital from sources believed to be reliable, but AlJazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
8
