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The Effectiveness of Technical Trading for Arab Stocks

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  • Wassim Dbouk
  • Ibrahim Jamali
  • Khaled Soufani

Abstract

In this paper, we examine the profitability of technical analysis for a cross section of individual Arab stocks. Our analysis, undertaken from the perspective of an Islamic investor, reveals that technical trading rules do not yield economically or statistically significant returns. While our results uncover some scant statistical evidence of technical trading rule profitability, risk adjusting the returns weakens the evidence in favor of predictability. Furthermore, break-even transaction costs do not exceed estimated transaction costs or bid-ask spreads in the markets examined.

Suggested Citation

  • Wassim Dbouk & Ibrahim Jamali & Khaled Soufani, 2014. "The Effectiveness of Technical Trading for Arab Stocks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(4), pages 5-25.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:4:p:5-25
    DOI: 10.2753/REE1540-496X500401
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    Cited by:

    1. Naz, Iram & Shah, Syed Muhammad Amir & Kutan, Ali M., 2017. "Do managers of sharia-compliant firms have distinctive financial styles?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 174-187.
    2. Dbouk, Wassim & Jamali, Ibrahim, 2018. "Predicting daily oil prices: Linear and non-linear models," Research in International Business and Finance, Elsevier, vol. 46(C), pages 149-165.
    3. Massoud Metghalchi & Linda A. Hayes & Farhang Niroomand, 2019. "A technical approach to equity investing in emerging markets," Review of Financial Economics, John Wiley & Sons, vol. 37(3), pages 389-403, July.

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