KSE-100 Index: Closing Below 30-DMA And 100-DMA Suggests Further Downside

The Keystone for August 10, 2010

KSE-100 Index: Closing Below 30-DMA And 100-DMA Suggests Further Downside

First support 9,953 points, second support 9,838 points; First resistance 10,107 points, second resistance 10,191 points

Analysis and Overview:

The index opened marginally positive and after touching its day's high, took to a sharp downtrend to close well in the red in the process breaching the 30-DMA as well as the 100-DMA. This suggests further pressure. Volumes increased by 33.06% and stood at 80.10 mln which suggests that the correction came in with relatively higher volume.

The Stochastic Oscillator on the daily chart maintains its downtrend as well as its sell signal. The RSI has also generated a sell signal and has now conformed to a steady downtrend. Moreover the MACD too has conformed to a downtrend and has now confirmed a sell signal.

Taking the above factors into consideration, any upside should be capitalized upon to sell as the trend has turned negative. Going forward the next critical level should be the 200-DMA which currently stands at 9,780 points.

The first support is at 9,953 points and the second support is at 9,838 points. The first resistance is at 10,107 points and the second resistance is at 10,191 points.