TASI (Last: 6665.65, up 37.39 points)
The Tadawul All Shares Index (TASI) is showing downtrend on
short, medium and long term basis as the price is trading below 2 weeks moving
average and 2 weeks moving average is trading below both 12 and 52 weeks moving
average.
Though the long term trend remains down, there are some signs
of a short term turnaround visible on the charts. The first and foremost is the
appearance of sideways price action in the range of 6600-6900 which is
indicative of accumulation or short covering activity. To confirm a rally, the
TASI must cross the upper band of this sideways range and head towards its next
major resistance band at 7200-7400. Hesitation in crossing the 6900 level will
increase the odds of decline towards 6100 support.
The emergence of a divergence on the 14 day RSI chart is also
supporting our short term positive view. Though the divergence is somewhat weak
compared to SABIC (see the technical commentary on SABIC below) but the
conflict in price and velocity of trend is clearly visible. In our view, before
resuming dominant downtrend, expect small rise in prices. See the chart above
for details.
Trading Strategy: Sell on rise in stocks with negative
Trend Score. Buy on dips in the stock with positive Trend Score. Also keep a
close watch on the “Trend Score Change” column to get a clue on the velocity
the trend. To understand better please read the “Trend Score Guide” and
“Introduction”. See the Trend Score table below for details.
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