KSE-100 Index: Formation Suggests Uptrend Losing Momentum; Indicators Gradually Turning Negative

The Keystone for July 27, 2010

First support 10,241 points, second support 10,172 points; First resistance 10,362 points, second resistance 10,431 points

The index opened positive and after touching its day's high, remained range-bound throughout the day to close marginally in the green. Volumes witnessed a sharp decline of 40.33% and stood at 40.21 mln. The index's formation is a spinning top, while its cluster of formations suggests that the uptrend is losing momentum.

The Stochastic Oscillator on the daily chart maintains its sell signal, while the RSI is almost overbought. Moreover the MACD too is starting to lose steam and could generate a sell signal in the near term.

Taking the above factors into consideration, any upside should be capitalized upon to sell as the index is due for a short-term correction.

The first support is at 10,241 points and the second support is at 10,172 points. The first resistance is at 10,362 points and the second resistance is at 10,431 points.