Saudi Arabia Faces 13-Yr Falling Resistance

Below I plot the Tadawul Index – Saudi Arabia’s main equity index.

Note that it has rallied up to test falling resistance off its 2006 and 2014 swing highs and that the former occurred 623 weeks ago.

One of the interesting aspects of the 623-week decline off its 2006 all-time high is how much it resembles the way the DJI acted off its 1929 high.

Below we find that the DJI faced similar falling resistance at +627 weeks off that high.

Running an analog for each index off their respective all-time highs reinforces the similarities.

Given 13-yr falling resistance, a cyclical peak suggested by the DJI analog in this time frame off its 1929 high and my view that EM equities in general have put a cyclical peak in place, one would likely make the argument that Saudi Arabian equities too are about to experience a cyclical peak themselves.

If wrong and the Tadawul Index can manage a break above falling resistance, it likely means the KSA ETF has plenty of upside runway remaining.  Below we find it’s broken out of a bullish-looking ascending triangle pattern in 2018.