With the latest fall, the sensex has broken all the immediate support levels. One of the crucial was the 3818 level. As a results of this sharp fall, all the short as well as medium term oscillators have turned negative. Technically speaking, the medium term outlook for the market has clearly turned negative, and suggest that any rally that occurs would be short-lived.

While technical position has very important place in market analysis, one has to consider the fact that during such occasions, the technical indicators take a backseat as market moves are determined by special events. In fact, for this reason despite being technical indicators hinting at a negative outlook, anypositive news would result in a sharp rally, defying the current position. Technically, the sensex has a good support in the range of 3350-3400 points.

For intra-day traders, the sensex should not break the Friday's low of 3675, if the short-term outlook has to improve. As for the individual counters, since a large portion of pivotals have fallen sharply, a rally cannot be ruled out.

The number one and number two (HLL and ITC) have turned extremely weak. However, SBI is near its support levels and the chances of rally are fair. One can take a long position with a stop loss of Rs 218. Reliance is another counter which can show a sharp recovery. Among the other index-based stocks, MTNL, Bhel, and HPCL appear weak. However, Hindalco is at its support level and may bounce back. Similar can be said about Bajaj Auto.

With few exceptions, the position of rest of the specified stocks is far from impressive and do not look attractive for traders. While the current technical outlook for the market may appearnegative, for investors, the strategy to make purchases in small quantities may yield good returns. For this, select buying should be considered on counters like Ashok Leyland, Burroughs Wellcome, HDFC Bank, Hero Honda, Infosys Technologies, Ingersoll Rand, Nocil and Pfizer. All these counters have remained firm during the past three trading session when the market lost nearly 400 points from the peak. This is an extremely bullish sign.