KSE-100 Index: Double Top Leads To Negative Closing; Recovery Phase Nearing Completion

The Keystone for June 09, 2010

First support 9,688 points, second support 9,595 points; First resistance 9,822 points, second resistance 9,894 points

Analysis and Overview:

The index opened positive and after touching its day's high in the initial hour, took to a downtrend to close in the red. Volumes declined by 15.25% and stood at 136.28 mln. The index has created a double-top and as a consequence closed in the red. This suggests that the index's recovery phase is nearing completion.

The 30-DMA has cut the 100-DMA from above with the 100-DMA also conforming to a downtrend as well. This is bearish. Moreover, the Stochastic Oscillator on the daily chart has stalled in the overbought region and is on the verge of generating a sell signal. Also the RSI on the daily chart has shown weakness.

Hence, the short-term recovery phase is nearing completion and any upside should be capitalized upon to sell.

The first support is at 9,688 points and the second support is at 9,595 points. The first resistance is at 9,822 points and the second resistance is at 9,894 points.