KSE-100 Index: Formation An Adjustment To Monday's Formation; Sell Signals Intact

The Keystone for July 01, 2010

First support 9,868 points, second support 9,793 points; First resistance 9,651 points, second resistance 9,578 points

Analysis and Overview:

The index opened positive and after touching its day's low, took to an uptrend to close below the high and marginally above the open. Volumes increased by 13.43% and stood at 71.29 mln. The index's formation serves as an adjustment to Monday's decline. The trend remains bearish. Moreover the stalling behavior of the index is a cause of concern as back-testing of data suggests that levels usually fail and the index breaks below the 200-DMA.

The Stochastic Oscillator on the daily chart maintains its sell signal, which makes the formation a bearish divergence. Moreover the RSI on the daily chart has started to stall as well. Also, trend forecasting indicators have now turned bearish on the index.

Since the past two trading sessions, the index has been witnessing an adjustment phase to Monday's bearish formation. Moreover it has been repeatedly breaching the 200-DMA on an intraday basis. This is bearish and any upside should be taken advantage of to sell.

The first support is at 9,868 points and the second support is at 9,793 points. The first resistance is at 9,651 points and the second resistance is at 9,578 points.