November 07, 2017 - Aljazira Capital
November 07, 2017
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: 6800 levels continue as most important stability support, while we expect exceeding 7280 levels as a precondition for the index to regain its uptrend.
Technical Summary The index closed at 6985 points. General Trend/Daily: Despite the positive impression of the quarterly market results as well as the positive movement of oil prices, the Saudi market index is still moving horizontally. Where current areas around 6800 points continue as the most important support for the index in the medium term, which forms the previous peak area for the month of April 2016, which the index exceeded it in December 2016. Moreover, It is expected that the Tadawul Index is in the process of establishing a third upward wave that started from 6800 level and targeting 8350 points on the med-run. The positive oil price movement could possibly form an important support for the index over the next period, with positive third quarter 2017 results for most companies. It is likely that, under the current technical indicators, profit taking would end around current 6800 levels (April 2016 peak), to continue moving north towards the expected levels at 7280 points.
Main Support Level at 6800 points
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
The index is currently at the lower levels of the Bollinger with a strong consolidation, which is likely to form purchasing pressures during the coming period. •Estimations: The outlook remains stable on the medium term, with maintaining 6800 levels as key support, while the index is likely to return to complete the main upward trend towards the resistance levels for the next period at 7280 7580 points, respectively. Caution sign if the index falls below 6800 points and closes the week below.
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MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Tadawul Index/Monthly: The index is still holding above its most significant monthly averages lines at 6800 points for the 12th month in a row, while crossing 7075 is important to strengthen the bullish trend.
Technical Summary The index closed at 6934 points in October 2017.
General Trend: Based on the index movement during the month, the index is still holding above the most prominent support levels of 6800 points, which represents the support area for the simple monthly moving average SMA (20 months). We raise the caution level in case of a break below the current area and the monthly close below 6800 points. While we currently expect the index to complete the upside movement again to position above 38.2 Fibonacci level of the last bearish wave at 7075 points. The outlook on the medium term remains stable for future movement as the market was able to hold above its important monthly averages. We expect higher liquidity supported by the positive earnings and higher oil prices, as well as overpassing the current horizontal level.
Positive crossings of averages
The MACD indicator trends positively after crossing the index line, which may increase buying pressures after holding above its main monthly average during November. The current level at 6800 points represents the average line of the Bollinger Index and is the safety valve for stability in the medium -term. Estimations: It is likely that the level of 6800 points continue as an important main support level for a later uptrend, and we do not expect to see a monthly close below it. Holding above a monthly average provide basis for a bullish wave targeting resistance levels at 7075 - 7600 points. While we expect that a monthly close below 6800 could raise the profit taking levels to 6400 points.
Source: Bloomberg
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3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Brent: Brent is at highest level since 2016, supported by the improvements in the oil market fundamentals, targeting US$ 65.70 levels.
weekly movement
Technical Summary The index closed at US$ 61.37 during October. Looking at the monthly movement, Brent Index was able to exceed previous peaks at US$ 58.40/barrel and hold steady above the main monthly averages. Prices reacted positively to the news about lower shale oil supplies and number of rigs, as well as the notable decline in the weekly US oil inventory. We expect that the current Brent price could target US$ 65.70 levels. Brent index continues to move positively amidst the positive interactions of the main monthly averages since crossing for the first time earlier this year, after the first break of the averages by the end of 2014. The monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicate faster positive movement.
Monthly movement
Weekly movement: The index is still moving up after exceeding the broadening pattern mentioned in the chart and approaching the second target at US$ 63. Short-term outlook for the oil price movement is more positive after exceeding the previous peak and is expected to achieve new highs. Estimations: Continued bullish trend is expected towards US$ 65.70 and return to profit taking around US$ 58.50 levels. After which, we expect testing the main resistance levels at US$ 65.70 US$ 68.0. Meanwhile, the support levels continue at US$ 58.50 and we do not expect it to break below in the near term.
Source: Bloomberg
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4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Gold/Weekly: Gold still moving close to the main support level of US$ 1265/ounce, and closing the week below that level demand caution.
Technical Summary The index closed at US$ 1271 per ounce.
weekly movement
Considering the weekly movement, the Gold price index was able to exceed the technical pattern indicated earlier (Inverse Head and Shoulders) at US$ 1270/Ounce, due to tensions by North Korea and lower US$ strength index. The Gold index returned to test the previous break point around US$1265/ounce.
Neckline
The weekly RSI indicator returned to test the current uptrend line, thus raising expectations of an inverse trend on the short-term. We expect the conservative policies of the new Fed to raise the US interest rate could be a catalyst for the Gold movement.
Re-testing area
On the monthly movement, the index continued movement above its 20 and 10 month averages lines for the eighth consecutive month. We expect that continued monthly movement above $1265 to add more support for future Gold prices. Estimations: With the current technical data, we expect the end of profit taking to be at US$ 1265, then return to test the important weekly resistance levels at US$1305 - US$1355/ounce. We expect that breaking the 1355 level will provide room for a strong upward movement targeting US$ 1450 in the medium run. While we expect that a break below US$ 1260 levels may raise the level of caution with the cancellation of the positive scenario mentioned for the movement of gold.
Source: Bloomberg
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MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
THE USD INDEX: Significant improvement in technical indicators to increase target levels to 96.10 - 97.40 points before completing the bearish move again.
Technical Summary The USD index closed at 94.90 points . Looking at the weekly movement, the dollar index trended higher for a short period after bottoming out the previous low level, marking its lowest level in more than 18 months. The dollar index also managed to surpass the most important weekly averages lines with almost a positive intersection between them, which eases pressure on the major dollar movement for the coming period. Our estimations indicate a possible extension of the bullish wave to 96.10 97.40 over the upcoming period, before return to its main bearish trend. Though the US$ index received strong support last month, the monetary policies of the new Fed board in the US may contribute to the formation of the dollar movement for the next period. It is noteworthy that next February marks the end of the current US Fed Reserve president mandate. The IMF’s medium-term outlook continues to add pressure on the dollar, supported by negative US policy implications. The RSI weekly index was able to exceed the 50 line, and there are positive movements in the MACD weekly index, which could catalyze a bullish wave over the upcoming period.
Bounce back area Averages crossing area
Estimations: We expect the dollar index to start a profit-taking move to re-test the averages penetration area at 93.50 points. After which, we expect it to continue a temporary bullish movement towards 96.10 - 97.40 points due to the technical indicators improvement and exceeded weekly averages.
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
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Tadawul; Weekly Index: 6800 levels continue as most important stability support, while we expect exceeding 7280 levels as a precondition for the index to regain its uptrend.
Technical Summary The index closed at 6985 points. General Trend/Daily: Despite the positive impression of the quarterly market results as well as the positive movement of oil prices, the Saudi market index is still moving horizontally. Where current areas around 6800 points continue as the most important support for the index in the medium term, which forms the previous peak area for the month of April 2016, which the index exceeded it in December 2016. Moreover, It is expected that the Tadawul Index is in the process of establishing a third upward wave that started from 6800 level and targeting 8350 points on the med-run. The positive oil price movement could possibly form an important support for the index over the next period, with positive third quarter 2017 results for most companies. It is likely that, under the current technical indicators, profit taking would end around current 6800 levels (April 2016 peak), to continue moving north towards the expected levels at 7280 points.
Main Support Level at 6800 points
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
The index is currently at the lower levels of the Bollinger with a strong consolidation, which is likely to form purchasing pressures during the coming period. •Estimations: The outlook remains stable on the medium term, with maintaining 6800 levels as key support, while the index is likely to return to complete the main upward trend towards the resistance levels for the next period at 7280 7580 points, respectively. Caution sign if the index falls below 6800 points and closes the week below.
2
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Tadawul Index/Monthly: The index is still holding above its most significant monthly averages lines at 6800 points for the 12th month in a row, while crossing 7075 is important to strengthen the bullish trend.
Technical Summary The index closed at 6934 points in October 2017.
General Trend: Based on the index movement during the month, the index is still holding above the most prominent support levels of 6800 points, which represents the support area for the simple monthly moving average SMA (20 months). We raise the caution level in case of a break below the current area and the monthly close below 6800 points. While we currently expect the index to complete the upside movement again to position above 38.2 Fibonacci level of the last bearish wave at 7075 points. The outlook on the medium term remains stable for future movement as the market was able to hold above its important monthly averages. We expect higher liquidity supported by the positive earnings and higher oil prices, as well as overpassing the current horizontal level.
Positive crossings of averages
The MACD indicator trends positively after crossing the index line, which may increase buying pressures after holding above its main monthly average during November. The current level at 6800 points represents the average line of the Bollinger Index and is the safety valve for stability in the medium -term. Estimations: It is likely that the level of 6800 points continue as an important main support level for a later uptrend, and we do not expect to see a monthly close below it. Holding above a monthly average provide basis for a bullish wave targeting resistance levels at 7075 - 7600 points. While we expect that a monthly close below 6800 could raise the profit taking levels to 6400 points.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
3
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Brent: Brent is at highest level since 2016, supported by the improvements in the oil market fundamentals, targeting US$ 65.70 levels.
weekly movement
Technical Summary The index closed at US$ 61.37 during October. Looking at the monthly movement, Brent Index was able to exceed previous peaks at US$ 58.40/barrel and hold steady above the main monthly averages. Prices reacted positively to the news about lower shale oil supplies and number of rigs, as well as the notable decline in the weekly US oil inventory. We expect that the current Brent price could target US$ 65.70 levels. Brent index continues to move positively amidst the positive interactions of the main monthly averages since crossing for the first time earlier this year, after the first break of the averages by the end of 2014. The monthly indicator MACD positively moves beyond the signal line, the convergence of linear signal and MACD indicate faster positive movement.
Monthly movement
Weekly movement: The index is still moving up after exceeding the broadening pattern mentioned in the chart and approaching the second target at US$ 63. Short-term outlook for the oil price movement is more positive after exceeding the previous peak and is expected to achieve new highs. Estimations: Continued bullish trend is expected towards US$ 65.70 and return to profit taking around US$ 58.50 levels. After which, we expect testing the main resistance levels at US$ 65.70 US$ 68.0. Meanwhile, the support levels continue at US$ 58.50 and we do not expect it to break below in the near term.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
4
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
Gold/Weekly: Gold still moving close to the main support level of US$ 1265/ounce, and closing the week below that level demand caution.
Technical Summary The index closed at US$ 1271 per ounce.
weekly movement
Considering the weekly movement, the Gold price index was able to exceed the technical pattern indicated earlier (Inverse Head and Shoulders) at US$ 1270/Ounce, due to tensions by North Korea and lower US$ strength index. The Gold index returned to test the previous break point around US$1265/ounce.
Neckline
The weekly RSI indicator returned to test the current uptrend line, thus raising expectations of an inverse trend on the short-term. We expect the conservative policies of the new Fed to raise the US interest rate could be a catalyst for the Gold movement.
Re-testing area
On the monthly movement, the index continued movement above its 20 and 10 month averages lines for the eighth consecutive month. We expect that continued monthly movement above $1265 to add more support for future Gold prices. Estimations: With the current technical data, we expect the end of profit taking to be at US$ 1265, then return to test the important weekly resistance levels at US$1305 - US$1355/ounce. We expect that breaking the 1355 level will provide room for a strong upward movement targeting US$ 1450 in the medium run. While we expect that a break below US$ 1260 levels may raise the level of caution with the cancellation of the positive scenario mentioned for the movement of gold.
Source: Bloomberg
All rights reserved | Disclaimer: Please refer to the Disclaimer on the last page
5
MONTHLY SAUDI TECHNICAL REPORT TECHNICAL November 07, 2017
WEEKLY
23 November 2014
THE USD INDEX: Significant improvement in technical indicators to increase target levels to 96.10 - 97.40 points before completing the bearish move again.
Technical Summary The USD index closed at 94.90 points . Looking at the weekly movement, the dollar index trended higher for a short period after bottoming out the previous low level, marking its lowest level in more than 18 months. The dollar index also managed to surpass the most important weekly averages lines with almost a positive intersection between them, which eases pressure on the major dollar movement for the coming period. Our estimations indicate a possible extension of the bullish wave to 96.10 97.40 over the upcoming period, before return to its main bearish trend. Though the US$ index received strong support last month, the monetary policies of the new Fed board in the US may contribute to the formation of the dollar movement for the next period. It is noteworthy that next February marks the end of the current US Fed Reserve president mandate. The IMF’s medium-term outlook continues to add pressure on the dollar, supported by negative US policy implications. The RSI weekly index was able to exceed the 50 line, and there are positive movements in the MACD weekly index, which could catalyze a bullish wave over the upcoming period.
Bounce back area Averages crossing area
Estimations: We expect the dollar index to start a profit-taking move to re-test the averages penetration area at 93.50 points. After which, we expect it to continue a temporary bullish movement towards 96.10 - 97.40 points due to the technical indicators improvement and exceeded weekly averages.
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
