KSE-100 Index: Formation Suggests Short-Term Pullback To Continue

The Keystone for May 20, 2010

First support 9,999 points, second support 9,916 points; first resistance 10,105 points, second resistance 10,175 points

The index opened marginally negative and after touching its day's low it recovered to turn positive only to close in the red. Volumes were up by 39.39% and stood at 118.28 mln. The index has created a long lower shadow which suggests that the pullback is likely to continue. The overall trend remains bearish as the 30-DMA has taken to a downtrend and could cut the 50-DMA from above in the near term.

The Stochastic Oscillator on the daily chart maintains its sell signal, which coupled with the weekly and monthly Stochastic Oscillator maintaining sell signals is a bearish signal. However the RSI has shown some improvement from close to its oversold region. Also, the MACD maintains its downtrend as well as its sell signal on the daily and weekly chart.

The first support is at 9,999 points and the second support is at 9,916 points. The first resistance is at 10,105 points and the second resistance is at 10,175 points.