The week opened with big black candle which was a very bearish sign. It was Tuesday's price action which suggested that the index had indeed reversed. The index rallied from its low to close above the resistance level of 3197 points. The following day was a very long white candle, which suggested that the index could rally further. Thursday's trading was a star which was again followed by another small-bodied candle. Two consecutive small bodied candles suggests that the market may not rally immediately. We could see sideways price action for couple of sessions before a major rallymaterialises. The index is most likely to move between 3361 and 3197 points. The market will be only be able to rally when it shows a break out above the level of 3400 points.

The market action since the high of 3515 points can be contained within two converging down sloping trend lines. These trendline form the shape of a down sloping symmetrical triangle. This pattern can be classified as a down sloping wedge. This is widely regarded as a bullish pattern. The breakout from the pattern has already taken place during the current weeks trading.

This is regarded as a very bullish development. More importantly, this pattern has appeared at around the 38.6 per retracement level of the entire move from 2740 points to the recent high of 3515 points. Thus, it appears only a matter of time before the market begins to rally. The indicators are showing signs that the market is stabilising. The 14-day RSI (Relative Strength Index) is around the equilibrium level. The movement of these indicators shows that the downmove was not strong enough to take the indicator down to oversold levels. This shows that the market shows a lot a inherent strength. The MACD (Moving Averages Convergence Divergence) is in also above the equilibrium level. This suggests that the market is stabilising.

In the final analysis, if one is not bothered about a decline of 150 odd points, one may consider buying selectively at current levels. Short term traders may well be advised not to hold overnight short position because the chance that the market may open against you can be very strong. The better option is to buy on declines and wait for a rally.

Atlas Copco:
The weekly charts of this stock indicates appearance of a 'harami pattern'. The volumes of the stock has shown a sharp increase. The price faces over head resistance at around 154 and the best option for the traders is to buy on break above Rs 154. The stock does show a potential to rally to around Rs 250 in the medium term. One may buy on breakout with a stop loss below Rs140.

Bharat Forge:
This stock has also seen heavy increase in volumes in last couple of weeks. The price seems to be in nascent stages of a vibrant bull run. The price could stage a rally to around Rs 85 in the short term and on breakout above this level, the price could rally to around Rs 85. Once the price breaks above Rs 85, the price could rally to around Rs 120 in the medium term. The best option for the investors is to buy half the amount at current levels and add to positions on break above Rs 85. Keep stop loss below Rs 65.

Alfa Laval:
The price of this stock has shown a breakout from its resistance level of Rs 169. The breakout has been with a very heavy increase in volumes. The price offers a very attractive risk reward ratio and the up move is likely to be very fast. The price shows a potential to rally to around Rs 275 in the medium term. One may buy with a stop loss below RS 169.ASS:
Buy long Traders may buy long this stock on break above RS 1100 for a targetof RS 1150. Put a stop loss below RS 1075.

Thermax: The price of this stock is just above its support level of around Rs 175. Traders may sell short if and only if the price breaks below Rs 175. Put a stop loss above Rs 179.