At the Karachi Stock Exchange, the New Year brought a renewed sense of volatility - signalling that a correction followed by a consolidation may soon be on the cards.
While the average trading volumes haven changed much - 97 million last week, as against 96.1 in December - technical chartists are citing the overbought state of RSIs - a key indicator of price momentum.
The 14-week RSI value has shot up to 82, while the 14-day number is also as high as 79. (An RSI value higher than 70 suggests overbought, whereas a value less than 30 implies oversold status)
"As the market approaches its critical range of 12,687~13,272 - the mean of which is 12,980 points - there are possibilities that it will reverse on account of heavy selling pressure," says Qasim Anwar, a technical analyst at AKD Securities.
He added that if the resistance proves strong, the market could undergo a "minor correction that could take the index lower than 11,500 points, before it resumes its strength".
This means that from current index levels, there is still room for growth - some 600 points, before the index starts tapering off. What would provide that impetus when local benchmark bond yields - KSEs historical nemesis - inched up some 25 basis points in the last 15 days?
Perhaps, the answer to that would be MQMs return to the government, just as MQMs departure had lopped off 173 points last Monday. Even the Prime Minister Gilani also acknowledges this notion.
"Every time we are separate, the stock market goes down; now that we are together I hope the stock market will show positive signs," Gilani said at a joint press conference at MQM headquarters in Karachi.
Yet, caution should prevail as any minor correction could result into a miners correction, one that might be long and deep. At least, thats what tends to happen, when KSE-100 persistently fails to adjust itself against the benchmark PIB yields.
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