The index could advance by just 7 points to post an intra-day high of 3643. The low for the day was at 3554, a whopping 65 points drop over the previous low of 3619. Some recovery at the close enabled the Sensex to close at 3598, losing 85 points day over day.

The index has now retreated 38 per cent from its recent peak of 3804. This was, in fact, anticipated. As I had been pointing out in this column, the index was looking at a resistance at the 3815 levels. And the momentum was not strong enough to push through that. The only alternative left was to retreat, and to the current level. Itmight now fall futher to 3510. But that hardly matters now.

What the investor needs to know is this. It would be a great surprise if Monday ends up lifting the Sensex from the 3598 level itself. The index has seen much weakness combined with inter-day volatility in the last four sessions. That is not a strong foundation for the market to start moving up again. Should an attempt be made on Monday, I would be cautious of it getting aborted at the end of the day. It would be safer for you to place your trades, if you allow room for the possibility of the index to get down to 3510. And then the recovery could be slow. The index may follow almost a horizontal movement.

In short, reaction is still under way and it would take some more time to settle down. That is the technical picture as at end of Friday.