KSE-100 Index: Closing Above 50-DMA And 200-DMA Suggests Short-Term Recovery To Continue; Weekly

The Keystone for September 27, 2010

First support 9,857 points, second support 9,797 points; First resistance 9,971 points, second resistance 10,026 points

The index opened flat and after initially dipping in the red, managed to sustain in the green throughout most of the session and close off the session on a positive note. Volumes increased by 23.28% and stood at 48.58 mln. Average weekly volumes declined by 28.29% and stood at 58 mln, while the index declined 143 points. The index on the daily chart managed to close above its 50-DMA and 200-DMA, while also creating a lower shadow. On the weekly, however, it has created an Engulfing Bearish formation which is indicative of a top. This suggests that the recovery is likely to a short term one.

The Stochastic Oscillator on the daily chart is extremely oversold and is on the verge of generating a buy signal. Moreover the RSI on the daily chart edged up slightly. On the weekly chart the Stochastic Oscillator maintains its buy signal, while the RSI has shown weakness. Moreover on the weekly chart the index failed to sustain above the 30-week moving average (currently at 10,025 points) which is bearish.

The first support is at 9,857 points and the second support is at 9,797 points. The first resistance is at 9,971 points and the second resistance is at 10,026 points.