Today's interesting charts
David Fuller's view Price
charts represent reality in terms of supply and demand - the rest is noise.
Dubai (weekly & daily) is completing a V-bottom with very extensive right-hand extension base formation, indicating plenty of upside potential over the medium term to longer term. It is also short-term overbought but if the next reaction finds support above 50, that would continue to indicate overall demand dominance. A move beneath 45 would suggest a medium-term pullback.
Here are the top three shares in Dubai, in market capitalisation terms, and quoted in dirham (AED): Emaar Properties (weekly & daily) (EMAAR DB) (Est P/E 15.18, Yield 1.82%; Dubai Islamic Bank (DIB DB) (weekly & daily) (Est P/E 9.97, Yield 5.14%); Emirates Integrated Telecomm (DU DB) (weekly & daily) (Est P/E 12.51, Yield 5.84%).
Nigeria (weekly & daily) is resuming its uptrend despite some widely publicised massacres and a close beneath 32,700 would be required to indicate a more extensive corrective phase before higher levels are seen.
Japan's Nikkei (historic, weekly & daily) remains on a tear as does the Second Section TSE2 (weekly & daily). This persistent one-way traffic has continued because investors were significantly underweight Japanese equities, understandably given the back history, and were caught out by Shinzo Abe's appropriately aggressive, in my opinion, reflationary efforts. A question on the minds of everyone who is interested in Japan is: When will this steep advance spill over into a multi-month reaction and consolidation? We can only guess but should recognise the early evidence. Clear breaks in the progressions of higher reaction lows shown on the daily charts, accompanied by some large downward dynamics and a loss of upside momentum relative to what we have seen since mid-November 2012 are required to indicate more than short-term ranging consolidations. Meanwhile, watch for numerical hurdles in the path. The next big round number where some investors may reassess is 15,000 for the Nikkei, thereafter 18,000 where the important 2007 highs occurred. Watch the Topix Banks Index (weekly & daily) which will more than doubled when it reaches 200. Currently, a close beneath 180 would indicate a loss of form. Also, watch USD/JPY (historic, weekly & daily) because ¥100 is an obvious psychological hurdle. A move beneath ¥97, should it occur again, could be a concern if it lasted more than a day or two. Conversely, a clear break above ¥100 should give Japan's stock market an additional boost.
The US Dollar Index is rolling over (weekly & daily). It is still above the 200-day MA but this looks like a lower high, albeit within a long-term sideways trading range. Previously, a softer USD has often coincided with growing confidence in stock markets and GDP growth. Conversely, the greenback is seen as a liquid haven when investors are worried.