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Technically speaking
By Tanveer Arif
The table below provides details of price
ranges of the top 20 stocks during the past week. These 20 stocks are
selected every week based on their last 30 days average share turnover.
Additionally, the table also contains important price levels for each
stock which act as pivot points in price movements during this week. These
pivot points are estimated by conducting true range analysis (a branch of
technical analysis of stocks) on historical prices. True ranges are a
measure of stock volatility and provide stock traders with price markers
for entering or exiting a trade.
The glossary of technical terms used in the table is
as under:
Trend: Trend, presented as Negative, Neutral or
Positive, is determined using moving averages of the stock prices for
various historical time-periods and depicts the likely direction of price
movements in the future.
Triggers: Bullish and bearish triggers are the pivot
points at which a major or minor price breakout is initiated in either
direction. When a stock breaks out of these trigger levels, it is likely
to continue moving for some time in the direction of the breakout.
Resistance Levels: These are the price levels at which
a stock would trade, but not exceed, for a certain period of time. The
stock, in an upward trend usually stops rising above these levels because
sellers start to outnumber buyers.
Support Levels: These are the price levels at which a
stock would display difficulty falling below. It is usually considered as
the level at which a lot of buyers tend to enter the stock.
Technical Indicator: This is an indigenously developed
technical indicator created by the author using characteristics of
price-momentum defining tools like Stochastic Oscillator and Relative
Strength Index (RSI). Stochastic Oscillator compares a stock’s closing
price to its price range over a given time period whereas RSI compares the
magnitude of recent gains to recent losses in an attempt to determine
overbought and oversold conditions of a stock.
The Karachi Stock Exchange has continued to stay
upbeat during the week that ended on July 23, 2010. However, the benchmark
KSE-100 Index despite being moving with a positive trend is now showing
some signs of exhaustion and possibilities of a technical correction in
coming days can not be ignored. On last Friday, KSE-100 index closed at a
level which is about 36 points higher than its bullish trigger which fact
is also truly depicted by its ‘overbought’ position. In order to rise
further, the index with a potential to add another 140-150 points, would
have to brave out resistance at 10,365.62 and 10,400.41 points level.
On the downside, the index is about 90 points away
from its bearish trigger point that stands at 10,208.31. Below the bearish
trigger, the index would find support at 10,190.16 or -106 points and then
at 10,084.27 or -212 points.
On individual basis, Arif Habib Securities Ltd. and
Pakistan Strategic Allocation Fund showing strong signs of upward
potential. Arif Habib Securities that closed at Rs. 34.14 would gain
momentum by crossing over 34.50. AHSL depicts energy to go as high as
36.23 if it manages to defy resistance at 35.2 and 35.7. Bullish trigger
for PSA Fund stands at Rs. 7.35 level.
The above analysis is meant to be used only as
reference points for stock trading and must not be taken as recommendation
for buying, holding or selling stocks.
The writer is an investment analyst with a corporate
stock brokerage house and can be contacted at tanveer.arif@gmail.com
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