KSE-100 Index: Formation Suggests Index Stalling Around 200-DMA; 30-DMA On The Verge Of Cutting 200-DMA

The Keystone for June 24, 2010

First support 9,675 points, second support 9,605 points; First resistance 9,761 points, second resistance 9,815 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 declined by 29.10% and stood at 63.37 mln. The index traded around its resistance trendline (purple line) throughout the day. Even if it gives a breakout above it, it is not likely to be sustainable, as was the case on 5th and 6th May when the index gave a breakout on the 5th, stayed above it on the 6th and resumed its downtrend from the 7th May. Additionally, its formation is a "Spinning Top", which is indicative of a top especially considering the fact that it was created around its recent high.

The Stochastic Oscillator on the daily chart has now generated a sell signal thus making the formation a bearish divergence, while the RSI on the daily chart has started to stall around its resistance level as well. Moreover, the 30-DMA has just about cut the 200-DMA from above, which is a bearish signal.

The first support is at 9,675 points and the second support is at 9,605 points. The first resistance is at 9,761 points and the second resistance is at 9,815 points.