monthly technical report - Aljazira Capital
MONTHLY TECHNICAL REPORT
- CFTe1
August 07, 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 August 07, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: Expected end of profit taking at 7080 points level, and start completing the upward trend towards levels of 7750 points.
Technical Summary The index closed at 7085.5 points. General Trend/weekly: the Saudi market index is within the profit taking wave after bypassing the descending triangle (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 horizontal pattern.
Daily Movement
There is a possibility that the positive oil price movement could form an important support for the index over the next period, amidst the growth in semi-annual profits of the Saudi market at the end of 2Q17. It is likely that, under the current technical indicators, the profit taking in the index will end at 7080 levels (61.8% of the last upward wave), including completion of the ascending movement 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 intertwined, which may contribute to increase purchasing pressure during the coming period. •Estimations: The outlook remains positive over the medium term after bypass the previously mentioned horizontal path. With current profit taking likely to end around 7080 levels and return to complete the main upward trend towards the resistance levels for the next period at 7290 - 7750 points, respectively.
Source: Bloomberg
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2
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Tadawul Index/Monthly: As we had previously expected, the index was able to close and hold above the monthly level 7075 points amid support for the positive overlap of monthly averages.
Technical Summary The index closed at 7094.5 points for the previous month of July. General Trend/Monthly: the index still moving above 7075 points support level for the seventh month that represents (38.2% Fibonacci) from the last downtrend. During July, the index returned to testing break points and having a monthly close above the testing point. we now expect an end to the horizontal path and continue the uptrend. The index remains around a strong monthly support level for 10 SMA at 7080 points. The outlook on the medium term remains positive for future movement as the market was capable to hold its important monthly averages. We also expect the end of profit taking around current levels, which may contribute to higher liquidity levels with the uptrend.
Positive crossings of averages
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
The MACD indicator trends positively after crossing the indicator line, which may increase buying pressures to the Index after successfully testing the important monthly averages during last July. 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 break. Estimations: It is likely that the level of 7075 points continue as a main support level for a later uptrend, and we do not expect to see a monthly close below it. Holding above a monthly average of 7075 could provide basis for an uptrend wave targeting resistance levels between 7610 to 8150 points.
3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Brent: For the first time in three months, Brent is above its monthly price averages, supported by the improvements in the oil market fundamentals. Continued caution until the price exceeds US$52.90/bbl. weekly movement
Technical Summary The index closed at US$ 52.65 per barrel during July. Monthly movement: Brent Index rebounded above the simple moving average levels of 10 months at US$ 52.25 / barrel, and was able to return above its (10,20) monthly averages for the first time in three months. Prices reacted positively to the news about slowdown in shale oil supplies and number of rigs, as well as the notable decline in the US oil inventory for the fifth consecutive week. We believe that starting the month of August above US$ 52.25 is a positive catalyst, along with the current global growth in consumption. 20 SMA simple months average at US$ 47.80 /bbl mark an important support level and we warn of any lower monthly close. The monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicate faster positive movement and uptrend momentum.
Monthly movement
Major support level 46.40 USD
Weekly movement: The index is about to test the level of US$ 52.90/bbl, which marks the upper limits of a broadening pattern as indicated in the weekly chart. Short-term outlook for Oil price movement is more positive, but we need a brake above 52.90 for higher prices. Estimations: The outlook remains cautious until price hovers above $52.90, along with a higher weekly close. After which, we expect testing the main resistance levels at $54.70 - $61.50. Meanwhile, the support levels continue at US$ 50.50 - US$ 47.80 consecutively.
Source: Bloomberg
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4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Gold / Weekly: To exit the horizontal movement and successfully technical pattern (Head and Shoulders), it must exceed US$ 1270.
bypass
the
current
Technical Summary The index closed at US$ 1258.9 per ounce.
weekly movement Neckline
Weekly movement: the Gold price index is in a third attempts to override the current technical pattern (Inverse Head and Shoulders) at US$ 1270/Ounce, where It continued moving higher after the decline of the US$ exchange rate. The US$ future movement will be an important factor in determining the possibility for Gold price to exceed US$ 1270.
Braking zone
The weekly RSI indicator returned to penetrate above the 50 level, thus raising expectations of a bullish trend on the shortterm. We expect that pressured US exchange rate and weak some economic data may be an indirect catalyst for the movement of gold. Monthly movement: the index rose again above the 20 and 10 month averages for the fifth month respectively. We also expect that a continued monthly movement above $1250 to add more support. Estimations: With the current technical data, continued profit taking and bearish trend towards support levels at US$1250 to test later the important weekly resistance levels at US$1270. We expect that breaking the mentioned level opens room for a strong upward movement targeting US$ 1470 by the end of 2017.
Source: Bloomberg
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5
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
THE USD INDEX: Our expectations indicate a speculative rebound, targeting 94.30 95.40 point, then continue the bearish trend.
Technical Summary The USD index closed at 93.54 points weekly movement: the dollar index continued to trend lower after breaking below its horizontal pattern (See chart), to record the lowest level in 11 months. The dollar index also moved below the important SMA weekly averages crossings, which adds some pressure on the movement of the US$ for the coming period. Our estimations indicate a possible end of the bearish wave at the current levels after forming a rebound candlestick, and expect shortly speculative rebound.
Area break model
Expected bounce back area
The US$ index received strong support from raising the Federal Reserve interest rate last month (June 2017), however, the slowdown in inflation growth and some US economic data contributed to the pressure on the dollar for the previous period. 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%, while the IMF's medium-term outlook continues to put pressure on the dollar, supported by negative US policy implications. Weakness factors on the weekly RSI indicator are clear after trending below the 30 indication line; Moreover, negative weekly movement continues for MACD index. Estimations: Our estimates indicate a close end of the bearish trend on the short term and starting a speculative rebound on the short term targeting levels of 94.30 - 95.40 point. While we expect the weekly close below 93.0 point to result in a bearish trend towards 92.50 - 91.50 point.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
6
SAUDI TECHNICAL WEEKLY 23 November 2014
Research Division
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, CAIA 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 2256060
+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
August 07, 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 August 07, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: Expected end of profit taking at 7080 points level, and start completing the upward trend towards levels of 7750 points.
Technical Summary The index closed at 7085.5 points. General Trend/weekly: the Saudi market index is within the profit taking wave after bypassing the descending triangle (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 horizontal pattern.
Daily Movement
There is a possibility that the positive oil price movement could form an important support for the index over the next period, amidst the growth in semi-annual profits of the Saudi market at the end of 2Q17. It is likely that, under the current technical indicators, the profit taking in the index will end at 7080 levels (61.8% of the last upward wave), including completion of the ascending movement 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 intertwined, which may contribute to increase purchasing pressure during the coming period. •Estimations: The outlook remains positive over the medium term after bypass the previously mentioned horizontal path. With current profit taking likely to end around 7080 levels and return to complete the main upward trend towards the resistance levels for the next period at 7290 - 7750 points, respectively.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
2
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Tadawul Index/Monthly: As we had previously expected, the index was able to close and hold above the monthly level 7075 points amid support for the positive overlap of monthly averages.
Technical Summary The index closed at 7094.5 points for the previous month of July. General Trend/Monthly: the index still moving above 7075 points support level for the seventh month that represents (38.2% Fibonacci) from the last downtrend. During July, the index returned to testing break points and having a monthly close above the testing point. we now expect an end to the horizontal path and continue the uptrend. The index remains around a strong monthly support level for 10 SMA at 7080 points. The outlook on the medium term remains positive for future movement as the market was capable to hold its important monthly averages. We also expect the end of profit taking around current levels, which may contribute to higher liquidity levels with the uptrend.
Positive crossings of averages
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
The MACD indicator trends positively after crossing the indicator line, which may increase buying pressures to the Index after successfully testing the important monthly averages during last July. 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 break. Estimations: It is likely that the level of 7075 points continue as a main support level for a later uptrend, and we do not expect to see a monthly close below it. Holding above a monthly average of 7075 could provide basis for an uptrend wave targeting resistance levels between 7610 to 8150 points.
3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Brent: For the first time in three months, Brent is above its monthly price averages, supported by the improvements in the oil market fundamentals. Continued caution until the price exceeds US$52.90/bbl. weekly movement
Technical Summary The index closed at US$ 52.65 per barrel during July. Monthly movement: Brent Index rebounded above the simple moving average levels of 10 months at US$ 52.25 / barrel, and was able to return above its (10,20) monthly averages for the first time in three months. Prices reacted positively to the news about slowdown in shale oil supplies and number of rigs, as well as the notable decline in the US oil inventory for the fifth consecutive week. We believe that starting the month of August above US$ 52.25 is a positive catalyst, along with the current global growth in consumption. 20 SMA simple months average at US$ 47.80 /bbl mark an important support level and we warn of any lower monthly close. The monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicate faster positive movement and uptrend momentum.
Monthly movement
Major support level 46.40 USD
Weekly movement: The index is about to test the level of US$ 52.90/bbl, which marks the upper limits of a broadening pattern as indicated in the weekly chart. Short-term outlook for Oil price movement is more positive, but we need a brake above 52.90 for higher prices. Estimations: The outlook remains cautious until price hovers above $52.90, along with a higher weekly close. After which, we expect testing the main resistance levels at $54.70 - $61.50. Meanwhile, the support levels continue at US$ 50.50 - US$ 47.80 consecutively.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
Gold / Weekly: To exit the horizontal movement and successfully technical pattern (Head and Shoulders), it must exceed US$ 1270.
bypass
the
current
Technical Summary The index closed at US$ 1258.9 per ounce.
weekly movement Neckline
Weekly movement: the Gold price index is in a third attempts to override the current technical pattern (Inverse Head and Shoulders) at US$ 1270/Ounce, where It continued moving higher after the decline of the US$ exchange rate. The US$ future movement will be an important factor in determining the possibility for Gold price to exceed US$ 1270.
Braking zone
The weekly RSI indicator returned to penetrate above the 50 level, thus raising expectations of a bullish trend on the shortterm. We expect that pressured US exchange rate and weak some economic data may be an indirect catalyst for the movement of gold. Monthly movement: the index rose again above the 20 and 10 month averages for the fifth month respectively. We also expect that a continued monthly movement above $1250 to add more support. Estimations: With the current technical data, continued profit taking and bearish trend towards support levels at US$1250 to test later the important weekly resistance levels at US$1270. We expect that breaking the mentioned level opens room for a strong upward movement targeting US$ 1470 by the end of 2017.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
5
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL August 07, 2017
WEEKLY
23 November 2014
THE USD INDEX: Our expectations indicate a speculative rebound, targeting 94.30 95.40 point, then continue the bearish trend.
Technical Summary The USD index closed at 93.54 points weekly movement: the dollar index continued to trend lower after breaking below its horizontal pattern (See chart), to record the lowest level in 11 months. The dollar index also moved below the important SMA weekly averages crossings, which adds some pressure on the movement of the US$ for the coming period. Our estimations indicate a possible end of the bearish wave at the current levels after forming a rebound candlestick, and expect shortly speculative rebound.
Area break model
Expected bounce back area
The US$ index received strong support from raising the Federal Reserve interest rate last month (June 2017), however, the slowdown in inflation growth and some US economic data contributed to the pressure on the dollar for the previous period. 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%, while the IMF's medium-term outlook continues to put pressure on the dollar, supported by negative US policy implications. Weakness factors on the weekly RSI indicator are clear after trending below the 30 indication line; Moreover, negative weekly movement continues for MACD index. Estimations: Our estimates indicate a close end of the bearish trend on the short term and starting a speculative rebound on the short term targeting levels of 94.30 - 95.40 point. While we expect the weekly close below 93.0 point to result in a bearish trend towards 92.50 - 91.50 point.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
6
SAUDI TECHNICAL WEEKLY 23 November 2014
Research Division
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, CAIA 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 2256060
+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
