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Should You Play It?

Posted: 06/15/2014 - 9:27 am

On June 10, we published a note titled “Tables Turned” highlighting the weakening status of UAE equity markets.

We said that the rebound in the small/mid cap stocks which we were betting on lately proved much shorter than initially expected and the market was dominated by high volatility and mixed signs (read: Tables Turned).

This has pretty much been the case since just before the 9 UAE stocks joined the MSCI list.

Whenever volatility dominates the scene, it tends to pay off to look at the big picture to get a better understanding of where the markets stand.

As the chart shows, the markets remain in a corrective mode that began in mid-May and though we could see Thursday’s rebound possibly extend by another 4% – the area around 5000 in the DFMGI index, buying should be avoided until we get a clear signal that the correction is over.

The current high volatility is ideal for intraday traders but hardly suitable for catching short-term trends that last a week or longer.

click to enlarge


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