DFM index breaks two-year downtrend
Dubai, February 28, 2012
The Dubai Financial Market General Index (DFMGI) broke its two-year downtrend surging by over 29.5 per cent during the period from January 17, 2012 to date, said a leading UAE brokerage in its report.
The recent results affirm signs of a medium-term rally, but investors must be vigilant as the local markets are not yet ‘out of the woods,’ stated Al Ramz Securities, one of the UAE’s leading brokerage houses.
DFMGI rose by 382 points throughout 41 calendar days; retracing therefore, above 96 per cent of the last major drawdown.
"It is important to note that the market has lost 23.5 per cent or 397.5 points between April 20, 2011 and January 16, 2012 (last major drawdown of 271 calendar days)," explained Talal Touqan, the head of equity research, Al Ramz Securities.
"In terms of major breakouts, it has been confirmed that price levels are out of transitory period of consolidation and establishing a medium-term bullish trend, holding other factors constant, he noted.
According to him, the market is still in the mental state of switching from hope to aspiration.
With growing momentum, DFMGI managed to end last week above 1612 (1632.27). These additional twenty points are not that huge; however, they put the magic touch on confidence and sideliners’ attitude.
Traders are revising their price targets upwards, and dormant accounts are being reactivated. These are early signs of a medium-term rally, Touqan pointed out.
Prices will most likely move back upwards targeting 1690 points, marking the start of an imminent upsurge as well as a medium-term upswing, he added.-TradeArabia News Service