Hello Traders from the Middle East. So Dubai Stock index, or the DFM Index, has collapsed today, losing over 7%. Shocking, but the writing was on the wall all along. With the increase in rhetoric about Syria, we just needed a small push and it would have fallen over the cliff! When a move is approaching the end of its 5th wave, any informed investor would have sold off all his shares and waited for the inevitable correction to start. Elliott Wave Analysis of Dubai Stock Index shows that the 5th wave has indeed been completed. a fact that has become evident today, but something we should have anticipated. You can observe from the Elliott Wave charts attached that Dubai index had earlier seen an extended third wave. When you already have an extension in either the first wave or third wave, you should expect the fifth wave to be of normal proportions. Finally, by examining the sub waves of the fifth wave, you could have gotten out of most of your investments close to the top. This is shown in the last chart below. What is the outlook for Dubai Index from here? Well, there are mild supports at the fourth wave level within the just completed fifth wave.But expect any recovery to be mild and short lived. We should choose to exit on a pull back, waiting for the next bull market to be signaled by Elliott Waves sometime in the future.
This blog aims to teach traders how to use Elliott Wave analysis in their trading. A variety of markets are covered to demonstrate that the principle works just as well in any of them. Whether you are a short term trader, or a medium term investor, you will find that this approach will add considerable value to your bottom line. Everything in this blog is for free. Every chart presented was done with a forward looking approach. Wave Times is different because I make no pretense that I know it all. However, I do know that a trader can make sensible trading decisions by using these techniques. Go ahead, and check it out yourself. These comments reach a few thousand enthusiasts. If this is your first time here, welcome aboard.
Today, I present you with a quick chart of the Dubai Stock Index. I am giving you a clue. Because the 2 impulse waves are normal, the fifth wave could potentially become an extended wave. However, you should also relate the current impulse wave to the measure of the prior impulse wave to see if you can find some relationships. Go ahead, and test yourself.
Best of luck.
A reader has posted a comment that he ran into trouble with the rule that the 3rd wave cannot be the shortest. (I bought your book and reached the “Rules of the game” Tried to implement it on the DFM Index Chart Starting from the March 2011 bottom i started marking.
I marked end of wave 5 at the end of April 2011 end, but when i tried to apply the rule “Wave 3 can never be the shortest impulse wave” it didn’t work (March 15 to March end). Please advise what i need to do next or you could you mark the DFM index chart)
So today’s post is just an example. (Unfortunately I won’t be able to do this every time a reader has difficulty in counting the waves of a stock that he is interested in!! But my suggestion is to follow the rules as explained, and change your count where necessary)
The most important point is this: don’t worry about having to change your count later on. So long as you are foillowing the rules and guidelines you should be able to take low-risk positions. If you want to tweak the count to suit your personal views, then you are taking the wrong path.
It has been a while since I looked at the Dubai index. From an Elliott Wave perspective, I suspect that we are continuing in a 4th wave bearish pattern that will eventually break down for a final leg. We have to be patient and enter the market only when a valid signal is seen. Click here to see the previous update on Dubai.
Following an extended 3rd wave sell off, the index had recovered by 50% of that decline. However, I feel that this recovery was only part of a complex 4th wave. SO be patient while this 4th wave unfolds over an extended period of time. We will get the 5th wave much later, at which time there will be clear signs of a bottom developing. That is the time to buy the blue chip stocks included in the Dubai index.
Here are the charts of Dubai Financial Market Index as well as Kuwait Stock Market Index. I prepared the analysis of Dubai Markets before the news as you can see from the date on top. Both charts are posted here just to illustrate the usefulness of elliott wave analysis of stock markets even if one is considering an emerging market such as Kuwait. Enjoy!
On 15th October, when Dubai was trading at 3427 I warned that we could see 2760 if it started to come off quickly. Today it reached 2343, and a lot of investors are worried. A safe level to buy will be around 1860 in the index. As always, when one is trying to pick a bottom in a bear market, the amount risked should be small. Only when we get a decisive turn should we expose ourselves to a larger amount. Here is your chart of the DFMGI.
Back in January 2008, Dubai’s main stock index, DFMGI, was at 6320. Last week it traded at a low of 2991, a loss of over 50%. Investors have been badly hit. After the regulators announced several concessions and guarantees, we saw a smart rebound that lasted exactly two days. Resistance at the 3700 level was tough enough to push it down today by 275 points, or 7.4%. Many investors are worried about how long their pain will last. My view is we are close to, but certainly not finished with testing the lows. Take a look at the chart. dubai-15-oct-2008 I am suggesting a first target at around 2910. If we get there too quickly, the risk increases for going lower still, to 2760. Right now, stay on the sidelines. Even if we bounce in the coming sessions on new buying by Govt backed funds, you will be better-off by waiting for 2910.