KSE-100 Index: Formation And Closing Below 200-DMA Suggests Further Downside Risk

The Keystone for May 28, 2010

First support 9,354 points, second support 9,261 points; first resistance 9,505 points, second resistance 9,562 points

Analysis and Overview:

The index opened flat and after touching its day's high, took to a steady downtrend to close well negative. Volumes were marginally lower by 4.83% and stood at 103.85 mln. After opening above the 200-DMA, the index failed to sustain itself only to close below it. Moreover the formation created in the process is a "Dark Cloud Cover" formation which suggests further downside risk.

The Stochastic Oscillator on the daily chart has started to stall just above the oversold region, while the RSI on the daily chart has once again shown weakness. Moreover 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 the overall trend remains bearish.

The first support is at 9,354 points and the second support is at 9,261 points. The first resistance is at 9,505 points and the second resistance is at 9,562 points.