In yesterday's post I looked at historical market action following +2.50% daily Index moves. The conclusion was that the DFM General Index tended to fall in value after such increases (about 68% of the time). However, when the Index failed to fall it usually resulted in another strong up day and it looks like this is what occurred on Monday's trading session.
The DFM General Index has now risen for four consecutive sessions. The chart below shows the percentage returns for individual Dubai stocks since the beginning of the four day rise (31st August):
The DFM General Index has risen 5.74% since August 31st. DFM, Emaar and Arabtec are the notable out performers over this period whilst DIC and Aramex are the biggest under performers.
Interesting to note that Aramex, the best performing Dubai Stock this year, has been one of the biggest under performers during the recent market strength.
Of course, we all want to know whether the recent short-term Dubai strength will develop into something more long-term and substantial. From my analysis short-term rallies don't really reveal much about what's going to happen three months or even one month down the line. From my perspective the Dubai market will have to show strength over a much longer period to persuade me that this bear market is turning bullish.
With the Eid holiday approaching it will be interesting to see how the Dubai market trades over the next couple of sessions. Will everyone try and bag their profits and run for the exits? Or is there a new found confidence amongst traders that will propel the market higher into the holiday break?
What do you think?
Enjoy.
