KSE-100 Index: Formation Suggests Short-Term Recovery Possible; Overall Trend Bearish

The Keystone for August 12, 2010

First support 9,807 points, second support 9,753 points; First resistance 9,931 points, second resistance 9,989 points

Analysis and Overview:

The index opened positive and after touching its day's high, took to a sharp downtrend to close well in the red and below the 50-DMA. Volumes declined by 34.57% and stood at 61.64 mln. Despite the fact that the index closed below the 50-DMA, it managed to sustain above its former double top at 9,850 points. This suggests that a short-term recovery is possible. Critical resistance is placed between 10,078 (100-DMA) and 10,173 points, while support is placed at 9,790 points being the 200-DMA.

The Stochastic Oscillator on the daily chart has become well oversold thus suggesting the possibility of a short-term recovery. However on the weekly chart it has now assumed a downtrend and has generated a sell signal in the process. The RSI and MACD have conformed to their respective downtrends and in the process have generated sell signals.

The first support is at 9,807 points and the second support is at 9,753 points. The first resistance is at 9,931 points and the second resistance is at 9,989 points.