Russian Stocks May Rally 23% More This Year: Technical Analysis

By William Mauldin

July 23 (Bloomberg) -- Russia’s RTS Index, the world’s best share index in the past six months, may rally another 23 percent this year, based on technical analysis of moving averages by New York-based Auerbach Grayson & Co.

The 50-day moving average of RTS prices climbed above the 200-day exponential average this month, representing a “bullish cross,” according to Auerbach Grayson. The index’s rally from 836, representing a 50 percent retracement from this year’s high in June and January low, signals “bullish momentum” has returned, the brokerage said.

“A resumption of the uptrend in earnest has begun,” said Richard Ross, a technical analyst at Auerbach Grayson, which specializes in emerging and frontier markets and has research affiliates in 120 countries.

The RTS is likely “retest” the 1,180 level “by the late fall,” Ross said. The RTS fell 2.5 percent yesterday to 963.06, snapping seven-day rally. The RTS is close to “resistance” levels at about 979 and 994, based and the 200-day and 50-day moving averages, respectively, according to Bloomberg data and Auerbach Grayson.

“Once we consolidate prices in here and move back above these moving averages, that’s going to provide the catalyst for greater upside,” Ross said.

The 50-stock RTS has climbed 15 percent after closing at two-month low of 835.23 on July 10 as speculation the global recession is easing spurred a rally in oil prices. Russia is the world’s largest energy supplier. The RTS has risen 93 percent in the past six months as oil has almost doubled from this year’s lowest close in February.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net