KSE-100 Index: Closing Below 50-DMA Adds Credence To The Bearish View; 30-DMA To Create Resistance

The Keystone for August 11, 2010

First support 9,836 points, second support 9,774 points; First resistance 9,929 points, second resistance 9,996 points

Analysis and Overview:

The index opened marginally negative and after forming a double top at its day's high, took to a sharp downtrend to close well in the red and below the 50-DMA. This adds credence to the view that the trend has turned bearish. Moreover volumes increased by 17.61% and stood at 94.21 mln, which indicates that the correction came in with volumes. The next support level is 9,780 points being the 200-DMA.

The Stochastic Oscillator on the daily chart maintains its downtrend as well as its sell signal, while on the weekly chart has now assumed a downtrend and generating a sell signal in the process. The RSI and MACD have conformed to their respective downtrends and in the process have generated sell signals.

Taking the above factors into consideration, any upside should be capitalized upon to sell as the overall trend has turned bearish. Going forward the next critical level should be the 200-DMA which currently stands at 9,788 points, while critical resistance stands at 10,120 points being the 30-DMA.

The first support is at 9,836 points and the second support is at 9,774 points. The first resistance is at 9,929 points and the second resistance is at 9,996 points