KSE-100 Index: Formation And Indicators Suggests Uptrend Nearing Completion; Critical Resistance Could Clip Gains

The Keystone for August 03, 2010

First support 10,309 points, second support 10,239 points; First resistance 10,443 points, second resistance 10,507 points

Analysis and Overview:

The index opened significantly negative however after touching its day's low it showed a marginal recovery only to close in the red. Volumes declined by 30.24% and stood at 79.51 mln. The index's formation confirms the view of a top and establishes 10,539 points as a significant resistance level. Critical supports lie between 10,000 and 10,170 points.

The Stochastic Oscillator on the daily has now generated a sell signal after becoming extremely overbought, while the RSI has also generated a sell signal after becoming 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 correction.

The first support is at 10,309 points and the second support is at 10,239 points. The first resistance is at 10,443 points and the second resistance is at 10,507 points