Technical Analysis of Islamic Finance on 16 Dec 2016

Technical Analysis of Islamic Finance on 16 Dec 2016

This is no buy/sell recommendation - just a trial to see if Technical Analysis (works to an extent) in Dhaka Stock Exchange.

There were quite a few bullish break-outs in DSE last week. Will try to write on a few during the weekend.

Islamic Finance's volume surprised me!

Fundamentally, it is an OK company. 

	2012	2013	2014	2015	Till Q3 '16
Annual Profit	86.0	86.0	193.0	198.6	113.7
EPS	0.85	0.77	1.66	1.64	0.94
Dividend	10% B	6% C + 4% B	8% C + 4% B	13%C
NOCFPS	-1.0	-4.0	2.7	1.0

Currently market is valuing it at 15 PE. Just think of the other NBFI's?

Technical formation seems to suggest it might go higher - will it be due to better than expected Q4 earnings - or is the market becoming inefficient (I will tackle Eugene Fama's EMH in a later article).

Now, let us look at the charts.

On the last trading day (15 Dec '16), it broke Resistance at 16.5 with extra-ordinary volume (3 year high).

Now there are two main scenarios:

1. It will keep on flying high - I think probability is low for this (but one cannot predict herd behavior).

2. It will retrace on low volume to around 16.5 to 17.1 - and then if it breaks upward with high volume, it will next face Supply around 20 (some Resistance) and then around 22+ (Major Resistance).

So it might give the Risk-taker an opportunity to enter at a lower price (stop loss if it goes below 15.8).

Let us see what happens . . .