Published on March 10, 2014
TECHNICAL ANALYSIS: QE INDEX AND KEY STOCKS TO CONSIDER QE Index: Short-Term – Upmove Al Rayan Islamic Index: Short-Term – Upmove Qatar Insurance: Short-Term – Upmove The QE Index gained for the second straight session and rose around 35 points (0.30%) to close at 11,642.04. The index respected its support of the 21-day moving average and continued to advance as buying interest pushed the price higher. However, the index needs to move above the 11,660.0 level in order to continue its bullish momentum. Any failure to move above this level may drag the index to test 11,605.73. The RSI is moving up in a bullish manner. The QERI Index extended its rally and moved higher by 0.63% to close the session at 3,393.40. The index breached the important resistance of 3,382.68 as bulls continued their domination for the second consecutive day. We believe if the index manages to cling onto 3,382.68, then there is a possibility of a further advance. Any decline below 3,382.68 may result in a pullback to the congestion zone. Meanwhile, both the indicators support a higher move. QATI cleared the important resistance of QR65.68 after surpassing the 21-day moving average on Thursday. Moreover, the stock has been trading along the ascending trendline over the past few days and is gradually gaining strength. We believe the stock may now approach the QR66.90 level as it has little resistance until then. However, a dip below QR65.68 may pull the stock to test the 21-day moving average. Meanwhile, the RSI is moving up. Qatar Electricity & Water Co.: Short-Term – Upmove National Leasing Holding Co.: Short-Term – Downmove Al Meera Consumer Goods Co.: Short-Term – Breakout QEWS penetrated above the resistances of the 21-day moving average and QR170.91 in a single trading session. We believe if the stock manages to hold onto QR170.91 on a closing basis, then a continuous rise toward QR174.36 is possible. However, any retreat below QR170.91 may drag the stock to test its 21-day moving average. Meanwhile, the RSI has rejected the mid-line and is moving up toward the overbought territory. NLCS has been in downtrend mode and is moving along the descending trendline over the past few trading sessions. We believe until the time the stock trades below this descending trendline the upmove seems to be in jeopardy and may continue its declining trend. Moreover, with both the momentum indicators pointing down NLCS’ preferred direction seems to be on the downside and may test QR27.52 (February 2011 low). MERS surged higher and breached the resistances of QR154.90 and QR159.0 in a single swoop. Notably, volumes were also high on the breakout indicating rising buying interest. We believe this strong breach of resistances has bullish implications and provides an upside target of QR164.0. Meanwhile, the RSI is moving strongly in the overbought territory, while the MACD has crossed the signal line into the positive territory indicating the likely continuation of this rally. Page 1 of 2
Name (Ticker) Last Close Trend Short Term Support Long Term First Resistance Second First Second Qatar Exchange Index (QE Index) 11,642.04 UP UP 11,600.00 11,520.45 11,660.55 11,754.45 Al Rayan Islamic Index (QERI Index) 3,393.40 UP UP 3,382.68 3,350.00 3,409.71 3,430.00 Masraf Al Rayan (MARK QD) 38.60 FLAT UP 38.00 36.55 39.10 40.00 Commercial Bank of Qatar (CBQK QD) 77.00 UP UP 76.40 75.90 77.50 78.00 Doha Bank (DHBK QD) 61.00 DOWN DOWN 60.00 58.20 62.00 62.50 Qatar Islamic Bank (QIBK QD) 75.10 DOWN UP 74.10 72.80 75.50 76.00 Qatar International Islamic Bank (QIIK QD) 76.80 UP UP 75.80 74.40 77.20 78.00 Qatar Insurance (QATI QD)* 65.70 UP UP 64.00 62.56 66.90 67.50 National Leasing Holding Co. (NLCS QD)* 28.15 DOWN DOWN 27.52 27.00 28.50 29.15 Widam Food Co. (WDAM QD) 42.00 DOWN DOWN 41.90 38.70 42.30 44.50 Al Meera Consumer Goods Co. (MERS)* 162.00 UP UP 159.00 154.90 164.00 165.00 Industries Qatar (IQCD QD) 196.00 UP UP 195.00 192.00 197.70 199.00 Qatar Electricity & Water Co. (QEWS QD)* 171.10 UP UP 170.91 168.00 174.36 176.64 Gulf International Services (GISS QD) 91.40 UP UP 88.00 85.80 91.80 94.00 Qatari Investors Group (QIGD QD) 40.80 DOWN DOWN 39.50 36.00 41.50 43.45 Barwa Real Estate Co. (BRES QD) 32.65 UP UP 32.00 31.60 32.85 33.20 United Development Co. (UDCD QD) 21.66 DOWN DOWN 21.00 20.50 21.70 22.00 Ooredoo (ORDS QD) 140.00 DOWN DOWN 138.50 136.00 141.00 143.50 Vodafone Qatar (VFQS QD) 11.82 DOWN UP 11.60 11.44 12.09 12.40 Nakilat (QGTS QD) 21.34 UP UP 20.90 20.50 21.83 22.19 Milaha (QNNS QD) 93.40 FLAT UP 93.00 91.30 95.10 96.50 Banks and Financial Services Banks and Consumer Goods and Services Consumer G Industrials Real Estate Telecom Transportat *These stocks are today’s suggested ideas Overall Methodology: The charts and descriptions on Page 1 provide an indicative view of the future direction of the equities mentioned. The table on page 2 has been provided to denote historical movements in certain stocks. The historical trend analysis uses 21- and 55day SMAs for indicating short-term and long-term trends, respectively. Based on these SMAs, the historical direction of the trend is denoted as UP, DOWN or FLAT. Selection of Key Stocks of the Day: Key stocks’ selection is based on our analysis of 19 members of the QE Index (excludes QNBK QD). Analysis includes identifying trends (short-term as well as long-term), patterns and support/resistance levels. Trend Direction: The methods used to determine trend direction are subjective in nature. We use 21-day SMA and 55-day SMA, absolute price movements, price movements relative to SMAs and accurately drawn trend lines and chart patterns to determine the short- and long-term trends. Investment Horizon: The definition of short term and long term depends upon investors’ preferences and their investment objectives. As a rule of thumb, the time horizon for traders/short-term trend is 1-3 weeks while it is 1-3 months for investors/long-term trend. Combining Technical and Fundamental Analysis: Investors can combine technical analysis (TA) with fundamental analysis (FA) to maximize their investment returns. While the “True Value” of stocks could be estimated by FA, the entry and exit timings could be fine tuned using technical analysis to benefit from short-term movements in stock prices. Trading Tactics: The trend direction should be analyzed based on the time-horizon of your investments. In general, investors attempt selling close to resistance levels during a downtrend and attempt buying close to support levels during uptrend. Definitions: 1> Simple Moving Average (SMA): A SMA is the average of the closing price of a security for a given period. 2> RSI (Relative Strength Index): A technical momentum indicator that ranges from 0 to 100 and compares the stock’s recent price movements by evaluating recent gains and losses. Stocks with RSI above 70 could be considered overbought and below 30 could be considered oversold. If the RSI falls below 70, it is a bearish signal. On the other hand, if the RSI rises above 30 it is considered bullish. We use a RSI of 14 days. 3> MACD (Moving Average Convergence Divergence): MACD denotes the relationship between two moving averages, which is used to spot changes in strength, direction, momentum and duration of a stock price trend. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the signal line, is also plotted on top of the MACD, functioning as a trigger for buy/sell signals. The MACD line above the signal line provides a positive signal and vice versa. Contacts Saugata Sarkar Ahmed M. Shehada Keith Whitney Sahbi Kasraoui QNB Financial Services SPC Head of Research Tel: (+974) 4476 6534 email@example.com Head of Trading Tel: (+974) 4476 6535 firstname.lastname@example.org Head of Sales Tel: (+974) 4476 6533 email@example.com Manager - HNWI Tel: (+974) 4476 6544 firstname.lastname@example.org Contact Center: (+974) 4476 6666 PO Box 24025 Doha, Qatar DISCLAIMER: This publication has been prepared by QNB Financial Services SPC (“QNBFS”) a wholly-owned subsidiary of Qatar National Bank (“QNB”). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange; QNB is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNBFS at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. While this publication has been prepared with the utmost degree of care by our analysts, QNBFS does not make any representations or warranties as to the accuracy and completeness of the information it may contain, and declines any liability in that respect. QNBFS reserves the right to amend the views and opinions expressed in this publication at any time. It may also express viewpoints or make investment decisions that differ significantly from, or even contradict, the views and opinions included in this report. COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS. Page 2 of 2
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