The table above compares the current value of each GCC market index to three moving averages.  The moving average lengths are 20 days, 50 days and 100 days.  The idea behind this analysis is to gauge where current prices are relative to historical prices over a short, medium and long term timeframe.

For example, the first GCC index in the table above is the DFM General Index.  The graphic tells us that the current price of the DFM General Index is 58% below the 20-day moving average (actually, to be more precise, the 58% figure isn't the exact difference between the DFM General Index and the 20-day moving average.  What I've done is to normalise this figure so that the value falls between -100% and +100%.  Just in case anyone was wondering.)

We can also see that the current price of the DFM General Index is 76% below the 50-day moving average and 66% below the 100-day moving average.  What does this tell us?  For the DFM General Index it tells us that the current price is lower, much lower, than it has been over the previous 20, 50 and 100 days.  Or, if you prefer, much lower than is has been over the previous short, medium and long term time frames.   

This analysis is repeated for the other GCC markets. Take a look at the the Muscat 30 Index.  That index, unlike the DFM General Index,  is currently trading above all three moving averages albeit only by a small amount for the 100-day moving average.

How is this useful?  Well, using these results we can look back and see what each index did following similar periods in the past.  The "Average 5-Day Change" column on the right gives us this information. Going back to the DFM General Index we can see that following periods when the price was less than -58% below the 20-day moving average the average price change over the next 5 day period was -1.73%.  Likewise,  when the Index was -76% or less below the 50-day moving average it tended to lose -1.60% over the next 5 days.

On the other hand, for the ADX Index we can see that the price is currently 62% above the 20-day moving average and when this has occurred in the past the Index value has, on average, risen 1.24% over the next 5 days.

In short, then, this analysis provides a quick, visual reference of where current index prices are relative to their short, medium and long term trading activity.  And based on this we can get an idea of what to expect of price direction in the short term future.

Going forward, I'll update this analysis on a weekly basis.

Enjoy.

P.S. Just to be clear, nothing in this blog should ever be construed as investment advice.  Always do your own analysis.