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Qatar: holding on

Posted: 10/21/2012 - 10:12 am

On October 11, we highlighted the importance of the short term support zone of 8420-8450 in the Qatar index (QSI) saying that the appropriate strategy for traders was to take a long position and bet that the support would hold (read: Qatar: to buy or not to buy).

Indeed, the support held. The July-to-date supporting trendline was validated for the third time keeping the market in positive mode. In fact, we also saw the QSI break above the month-long down trendline (red) hinting at renewed gains in the market.

That said, it is important to note that much of last week’s gains were driven by the heavyweight Industries Qatar while most of the other stocks in the market registered an average performance at best. With Industries Qatar flirting with its four year high near 155, however, the rest of the market will have to catch up in order to keep the positive momentum going.

In short, we hold a positive bias towards the QSI but we are keeping a close eye on the price action of the key constituents in the market as we think it will be hard for Industries Qatar alone to keep driving the rally. Technically, the next target in sight for the QSI stands at the September high near 8650.

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