Major Gulf stock indexes are nearing technical resistance on their 200-day averages and strong trading volume suggests they may break above those levels, paving the way for long-term uptrends to resume.

The Gulf markets tumbled below their 200-day averages in the final months of last year as the plunge in oil prices shattered retail investors' confidence. The indexes' technical breakdowns signalled the end of bull runs that had lasted a couple of years.

In the last few days, however, the indexes have shown signs of rising sustainably above the averages one again.

If that happens, it would indicate that the panic over oil had ended, and would be seen by many technical analysts as a positive shift in the long-term outlook for the markets.

The Saudi stock index, last at 9,559 points, tested and failed to break above its 200-day average in mid-March, subsequently pulling back sharply. This week it has begun testing that level again, closing above it on Sunday before falling back. Classic technical analysis suggests at least two straight daily closes above the average, now at 9,572 points, would be needed to confirm a clean break.

The 200-day average roughly coincides with the 61.8 percent retracement of the drop from the index's multi-year peak of 11,160 points, hit last September. A break would point back up to that peak; the slope of the uptrend line from the December low suggests it would be hit by the end of this year.

The Dubai index, last at 4,168 points, is approaching its 200-day average, now at 4,259 points; any break would leave no significant resistance before the 4,700-point area, where it peaked in the last quarter of 2014. Abu Dhabi is also nearing its 200-day average.

It is by no means certain that the indexes will break above their averages in coming days or weeks, but there are several reasons to think they might.

One is heavy trading volumes, a positive technical sign; Saudi Arabia's volume on Sunday was the highest since last May, while on Tuesday Dubai posted its strongest volume in 14 months.

Another is an improving outlook for oil prices; Brent crude has rebounded in recent days to 2015 highs near $65 a barrel, and some analysts are now talking of substantial further gains.

But in any case, the Gulf Arab economies have shown in recent months that they are more resilient to cheap oil than some economists had feared. They have had the fiscal reserves to continue heavy state spending, while private sectors have continued to grow healthily.

This can be seen in declining correlations between stock indexes and the oil price. While the 25-day correlation between the Saudi index and Brent was very high at above 0.9 for most of the period between October and February, it has now dropped back below 0.6.

The planned opening of the Saudi Arabian stock market to direct foreign investment on June 15 is another long-term positive for that bourse, although fund inflows may initially be slow because of cautious regulation.-Reuters