KSE-100 Index: Positive Closing With Low Volumes Suggests Index Undergoing Adjustment Phase

The Keystone for August 30, 2010

First support 9,523 points, second support 9,454 points; First resistance 9,657 points, second resistance 9,727 points

The index opened marginally positive and after initially setting its day's range it remained range-bound to close marginally in the green. Volumes sharply declined by 44.21% and stood at 35.40 mln. Average weekly volumes declined by 17.93% while the index lost 262 points. The index's formation serves as a breather and an adjustment. As it stands, the trend remains bearish as the 30-DMA and 100-DMA have taken to their respective downtrends and in the near term could cut the 30-DMA from above while the index continues to trade below them.

The Stochastic Oscillator on the daily chart has become oversold, while the RSI is neutral and the MACD maintains its sell signal. Also the Bollinger Bands have now conformed to a downtrend thus confirming the view that the trend has turned bearish. On the weekly charts as well, the index's indicators maintain their bearish stance.

The first support is at 9,523 points and the second support is at 9,454 points. The first resistance is at 9,657 points and the second resistance is at 9,727 points.