KSE-100 Index: Breakout Likely Not To Be Sustainable; Moving Average Crossover A Bearish Signal

The Keystone for June 25, 2010

First support 9,731 points, second support 9,650 points; First resistance 9,863 points, second resistance 9,951 points

Analysis and Overview:

The index opened on a positive note and remained range-bound around its day's high to close in the green. Volumes increased by 28.85% and stood at 81.65 mln. Although the index managed to sustain above its resistance trendline (purple line) the question remains of its sustainability. This was the case on 5th - 7th May when the index gave a breakout on the 5th May, stayed above it on the 6th May and resumed its downtrend from the 7th May.

The Stochastic Oscillator on the daily chart has once again become overbought, while the RSI on the daily chart has started to stall around its resistance level as well. Moreover, the 30-DMA has cut the 200-DMA from above, while the 50-DMA has cut the 100-DMA from above. This is a bearish signal.

It would be prudent to capitalize upon any upside to sell on strength.

The first support is at 9,731 points and the second support is at 9,650 points. The first resistance is at 9,863 points and the second resistance is at 9,951 points