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Monday, August 31, 2020

KSE100: Week 35-2020 Closing Notes - Surviving the Downpour!

Following up from our previous update, index performed better than our expectation and after some see-saw on Monday, it shot up with a strong uptrend. Strong support within the pivot zone is also honored inline with our prediction. However, the momentum was lost in the wake of the continued downpour which caused city-wide urban floods with large scale infrastructure failure and communications shut down. When impact was highly visible on the last trading day of the week, then index remained narrowly range-bound with the last trading day remaining indecisive and closing slightly negative.

Looking forward, we may see some struggling to reach the third major resistance of 41900 +/- 200, and then onwards it shall be a breakout for channel top. Keeping fingers crossed, happy trading Previous resistance of 40700 +/- 200 shall act as support during any corrective downtrend with the possibility open to re-test its pivot upper boundary at 40000 points. 

Despite adversity at the index, market capitalization demonstrates an incremental trend with the last trading day still managing to show growth over the previous day despite the index closing slightly negative. Overall, this demonstrates a strongly bullish picture of the index and recovery in the near future. We cannot rule out short term dips due to communications knock out or general profit-taking. But rest assured, the investors have shown confidence in buying the dip. 

Weekly closing attained a gain of +91.33 billion/PKR which was an encouragement over the previous week which closed -15.99 billion/PKR in the negative.  

Saturday, August 22, 2020

KSE100 - Week 34-2020 Closing Notes: Downpour on the Index

Following up from our previous update, the index has tested lower band of it its pivot range as indicated and triggered a sharp intraday recovery. Heavy downpour is also to take the blame partially as the ensuing chaos causes brokers to quit their desk and run home. Causing loss of activity in the midst of a trading day, which is reflected in market movement. Just has heavy downpour began in the second half, panic selling caused a sharp dip, which recovered in the last hour. 

We reaffirm our view that bulls will stay in charge as long as the index remains afloat in its pivot range. Support, pivot, and resistance are reinstated as before. Looking forward we expect to see a turbulent mid-week ahead with the possibility of the pivot range being re-tested on a closing basis. 

Looking at the ten-year historical monthly performance relative to the current situation, It seems that the market is following the 2016 trajectory where August is poised to close between neutral and slightly positive followed by a bullish wave in September. The index is also undergoing exchange of hands between sectors with OEP, fertilizer and banks expected to take the lead.  Keeps fingers crossed and hope for the best!

Market capitalization remained strong for the first three days of the trading week but aggressive profit booking was observed in the last two trading sessions which pushed the weekly average to close -15.99 billion/PKR lower than the previous week. 

Happy trading!

Friday, August 14, 2020

KSE100: Week 33-2020 Closing Notes & Happy Independence Day


A bit disappointment as index failed to show respect for the independence day and closed in the red. But overall behavior is within our expectations as per the previous post. Looking forward we may see the same whiplash behavior for the next few sessions before stability is found. As long as index retains its correction within the pivot zone, bulls dominance is assured. An earlier than expected recovery is a bonus! 

Major support, pivot, and resistance are updated as follows. We won't dig into intraday and minor levels as they happen to bring a lot of noise and our trading strategy has always been centered around the major trends. 

Support: 38300 +/- 200

Pivot: 39300 - 40000

Resistance: 40700 +/- 200

Despite profit taking and correction wave, daily capitalization remained afloat above the previous week average and the weekly average closed with the gain of +57.18 billion/PKR. This demonstrated that investors remain confident at buying the dip and net market inflows kept a positive momentum. 

Happy trading! 

Monday, August 10, 2020

KSE100: Week 32-2020 Closing Notes

There is no week 32-2020 mid update as there was no significant information needing to be updated. 

KSE100 begins to show signs of exhaustion as it approaches its second critical resistance of 40700 +/- 200 but managed to close the week above 40000 points. Mild profit-taking was observed during Friday second-half, probably accelerated by a heavy downpour which caused brokers and day traders to liquidate their positions early and rush to homes. 

Looking forward, we reiterate our view as per the previous post and expect the uptrend to continue with the usual phase of correction at major resistance and a possibility of strong reversal at the pivot. An exchange of hands between the sector may trigger a see-saw behaviour once again. 

Sector-wise, cements & pharma appear to be upside saturated while autos still have fuel to go. After all, the auto-sector is a prime beneficiary of a lower interest rate. OEP, Banking, Insurance & Fertilizer appear to be in their initial accumulation phase. 

Support: 38300 +/- 200
Pivot: 39300 +/- 200
Resistance: 40700 +/- 200

Daily market capitalization successfully floated above the outgoing weekly average for the entire trading week despite moderate profit-taking being observed.  The weekly average closed at a gain of +163.59 billion PKR. This means investor confidence has continued to grow week over week with dips being absorbed by fresh buyers. As mentioned in the previous post, we expect the market to comfortably grow towards 8000+ billion/PKR capitalization which has been its pre-pandemic average but also a saturation point before triggering major trend change. 

Monday, August 3, 2020

KSE100 - Week 31-2020 Closing Notes: Not all bulls go to the slaughter house!

First of all, we wish a very happy Eid Al-Adha 2020 to all our fans and followers. There is no week 31-2020 mid-update due to the trading week being shorter by a day. 

Following up from our previous update, we had expected strong support at 36900 +/- 300 whereas the index has shown a firm reversal from its pivot of 37600 +/- 100 and broke above its first resistance of 38300 +/- 300 successfully. This signifies the strength of bulls along with their impatience and could lead to a harder than expected correction at the market top. Since impatient rallies tend to cause an impatient sell off too. Bears ended up in a trap for time being and got trampled by the bulls brutally! Many were seen counting their losses and vowing not to take short positions again! 

 Looking forward, we do expect the index to make a double top at the pre-COVID19 levels but not without some see-saw behavior due to the presence of two known resistance in between. 

DoD market capitalization has stood higher than the previous week's average for the entire trading week, with a weekly average gain of +123.94 Billion/PKR. This signifies strong buying interest into the bourse and index is not likely to high saturation point before crossing the 8000 Billion/PKR barrier. 

Happy Trading!