KSE-100 Index: Closing Above 200-DMA With Low Volume Suggests Pullback To Continue

The Keystone for May 27, 2010

First support 9,357 points, second support 9,264 points; first resistance 9,508 points, second resistance 9,601 points

Analysis and Overview:

The index opened flat and after touching its day's low, took to a steady uptrend to close well positive. Volumes declined by 19.43% and stood at 109.13 mln. The index managed to close above the 200-DMA however volumes were low. This suggests that the pullback is likely to continue.

The Stochastic Oscillator on the daily chart has generated a weak buy signal while the RSI on the daily chart has shown improvement. On the other hand, the MACD maintains its downtrend as well as its sell signal on the daily and weekly chart. Also the 30-DMA has cut the 50-DMA from above with the latter now conforming to a downtrend as well. This confirms the view that though there is a short-term pullback likely, the overall trend remains bearish.

The first support is at 9,563 points and the second support is at 9,491 points. The first resistance is at 9,667 points and the second resistance is at 9,764 points.