KSE-100 Index: Formation An Adjustment To Thursday's Sharp Decline; Trend Remains Bearish

The Keystone for June 14, 2010

First support 9,425 points, second support 9,351 points; First resistance 9,528 points, second resistance 9,592 points

The index opened flat and remained strong throughout the day to close in the green. Volumes declined by 32.63% and stood at 67.86 mln. Average weekly volumes were up by 15.57% from 101 mln to 117 mln, while the index declined by 156 points. The index's formation serves as an adjustment to Thursday's sharp decline. The overall trend remains bearish.

The Stochastic Oscillator on the daily chart maintains its sell signal, while the RSI on the daily chart is generally in a downtrend. This makes Friday's formation a bearish divergence. Moreover the 30-DMA maintains its downtrend and in the near-term could cut the 200-DMA from above thus adding strength to the bearish view.

Since index has closed below the 200-DMA, it could likely test 8,684 points. Minor support is placed at 9,164 points. Critical resistance stands at 9,628 points being the 200-DMA. Moreover most of the index drivers are trading below critical moving averages and continue to show weakness.

The first support is at 9,425 points and the second support is at 9,351 points. The first resistance is at 9,528 points and the second resistance is at 9,592 points.