UAE markets: Bears show who’s boss, and it’s not positive for stock prices

UAE markets: Bears show who’s boss, and it’s not positive for stock prices:

Last week the Dubai Financial Market General Index (DFMGI) fell the hardest in 15 weeks. The index was down 86.25 or 3.13 per cent to end at 2,668.66. Most of the listings participated in the sell-off as there were only three positive issues against 31 declining. Meanwhile, volume increased to a six-week high.

Given last week’s bearish performance, there are a number of developments that increase the chance for a continuation of the long-term decline in the index. The outlook for the DFMGI has turned decidedly bearish as the bulls failed to hold support following a bullish breakout of a descending wedge that triggered four weeks ago.

As of last week the breakout has clearly failed and subsequently triggered a bearish signal as the month of November ends at a new trend low, the low for the month, and the lowest monthly closing price since the long-term swing low in January 2016 at 2,590.72. That low is now at serious risk of being broken to the downside as we are less than 3.0 per cent away. So far, the index has corrected by 28.6 per cent from the peak of 3,738.69 in February 2017.