KSE-100 Index: Recovery Phase Potentially Nearing Completion; Daily And Weekly Indicators Now Overbought

The Keystone for July 12, 2010

First support 9,907 points, second support 9,833 points; First resistance 10,026 points, second resistance 10,121 points

The index opened marginally negative but soon recovered and maintained a steady uptrend to close well into the green. Volumes increased by 31.83% and stood at 102.75 mln. Average weekly volumes marginally increased by 6.49% and stood at 55 mln, while the index gained 266 points. The index on the daily chart managed to sustain above its critical resistance of 9,865 points only to close just below the 100-DMA. Moreover on the weekly chart the index managed to close above its 30-week average.

The Stochastic Oscillator on the daily chart has now entered the overbought region, which is also the case on the weekly chart. The RSI on the daily chart is approaching its critical resistance trendline (blue trendline, lower portion), while on the weekly chart has shown marginal improvement.

The above factors suggests that the recovery phase is nearing completion as the Stochastic Oscillator on the daily and weekly chart has now become overbought and the rally was primarily triggered by the Stochastic Oscillator generating a buy signal on the daily chart.

The first support is at 9,907 points and the second support is at 9,833 points. The first resistance is at 10,026 points and the second resistance is at 10,121 points.