KASB Securities Limited and Economics Research- The Keystone – Equities

Karachi, July 13, 2012 (PPI-OT): KSE-100: KSE-100: Formation suggests correction and retest of critical support level

According to KASB Securities Limited,

• The index’s formation is somewhat of a shooting star, which is bearish and suggests that the index is likely to experience correction.

• The Stochastic Oscillator maintains its sell signal which makes its formation a bearish divergence while the RSI has stalled around its overbought region.

• KASB Securities Limited maintains KASB Securities Limited’s medium term bullish stance and suggest accumulating on weakness.

Analysis and Overview:
The index opened marginally positive and remained strong throughout most of the day. However it witnessed profit selling towards the end of the session but closed in the green. Volumes increased by 35% and stood at 109 million. The index’s formation is somewhat of a shooting star, which is bearish and suggests that the index is likely to experience correction. Moreover its formation cluster suggests that the uptrend is stalling. A possible test of its former breakout level of 14,312 seems likely.

The Stochastic Oscillator maintains its sell signal which makes its formation a bearish divergence while the RSI has stalled around its overbought region. On the other hand the MACD continues to improve and maintains its buy signal. This adds credence to the above view.

KASB Securities Limited maintains KASB Securities Limited’s medium term bullish stance and suggest accumulating on weakness.

The first support is at 14,331 points and the second support is at 14,258 points. The first resistance is at 14,481 points and the second resistance is at 14,553 points.