Since the end of October, however, both markets have given back some of those gains with the Dubai market 10% off its highs and the Abu Dhabi market off 5%.
The question now is does this current decline represent a mere pull-back before the market continues to move upwards or is it the beginning of a larger downwards move, the kind of which traders and investors in the UAE markets have become so used too over the past several years?
Well, trying to pick significant stock market bottoms can be a perilous endeavour. Especially for the UAE or other GCC markets whose price action is highly persistent (when prices start moving in a certain direction, up or down, they have a strong tendency to continue moving in that direction).
That said, it's a good idea to at least be on the lookout for potential market turning points. In this week's market analysis the trend outlook for the UAE markets is still mildly bearish. However, the breadth measures for the Dubai and Abu Dhabi markets (as measured by the 20-day advance/decline indicator) have both turned positive this week:
Now, any sizable market decline next week will see market breadth turn negative again. But if UAE stocks manage to hold up this coming week and breadth remains positive it could signify a larger upwards move is in the offing.
For a refresher on market breadth and how UAE stocks have performed under positive and negative breadth please see these previous posts: Market Breadth I, Market Breadth II & Market Breadth III.
Enjoy.
