JAZIRA SECURITIES BROKERAGE

STOCK CALL Tuesday, October 11, 2011

1

THE THIRD BEAR MARKET PHASE MAY RUN ITS COURSE SOON

We want in this bulletin to enlarge our view. We need not to restrict our considera-

tion to the current move, because when we try to identify the characteristics of the

current move, it seems illogical to me saying that only a secondary correction phase

is taking place without any hint to the context at which the move is materializing . It

seems to me more than just a regular, healthy and secondary correction in the context

of a bull market. I can believe that a secular bull market, which initiated early at

2003, is still in force and may continue for some years to come.

Guys, we are in bear market; it can be short or turned to be a prolonged move. Put-

ting the panic phase aside, don’t expect a noticeably pick up in activity until the accu-

mulation phase, which didn't materialized yet, come to an end.

It’s nice seeing the bear market move adhere somehow to the bear-market three phas-

es Pictorial characteristics. It has been applied most exclusive to market averages but,

that doesn't means we cannot pick one in an important big-cap security which domi-

nates the average to an acceptable degree.

Most farsighted investors regarded the security near EGP45.0 as an “overvalued”,

started distribution while the “public” were still active as the volume imply. A

breakout below a horizontal line (EGP41.25) was a trigger signal that something ex-

tremely bearish is underway. Here we come to the second phase; the “panic phase”. It

needs nothing but to see the straight line decline and the climactic proportions in vol-

ume histogram with your naked eyes . Most amazingly, the panic move found sup-

port at just the 61.8% Fibonacci retracement level, a rebound ( a secondary recovery

after most panic moves) was also violent but fall short off the early 2008 major re-

sistance level. Taking out the Fibonacci level, the last defense line, increased the

probability that something more than healthy correction is taking place.

Continue...

COMMERCIAL INTERNATIONAL BANK RIC: COMI.CA

JAZIRA SECURITIES BROKERAGE

STOCK CALL Tuesday, October 11, 2011

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Continued…

It was in fact a significant breakout, it had threatened both the last defense Fibonacci

level and the most moderate rising trend line. Keep adding bearish pieces to the bear-

ish puzzle wasn't weird manifestation at all knowing that the security was near the

end of, the “Panic Phase”

The third and last phase, which we think that the security is experiencing right now,

named a “ Discouraged Selling” phase. This phase always accompanies by a

“Deterioration in Business News” …. ;-) The characteristic of this phase, as the name

implies, is a deceleration in the selling power; the security is declining and attaining

lower levels, but in fact the “speed” of the decline is decelerating. We can say also

that “it’s not the power of the bears that pulls the security down, but it’s the lack of

buying power which keep the security down”

With momentum help, we became very sure about “Deceleration”. “Triple positive

divergence” signal in the RSI isn't a usual manifestation we used to see, but it’s such

a comprehensive prove that the security in its last stage of decline.

The Bear Market ends when everything in the way of possible bad news, the worst to

be expected, has been discounted, and it is usually over before all the bad news is

“out.” —- Edward & Magee ……. So, it seems that we have found it finally. We

have more than one proof that the security experiencing the "Last Phase” of a bear

market, we’re waiting for the worst news to be discounted, a decline below current

levels should come with no surprise, but a bounce off a declining support line is high-

ly predictable. We’ll be sure that the current price is expressing or discounting the

worst news after taking out a declining blue resistance line (EGP27.20), but as the

down side risk compared to the expected return shows a favorable investment oppor-

tunity, we advise long-term investors to ….

COMMERCIAL INTERNATIONAL BANK RIC: COMI.CA

BOTTOM LINE: (Last Price: EGP23.15) ACCUMULATE

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