The most interesting aspect was what happened on Wednesday. The index was at its rowdiest. The index fell by a more than 200 points from the day's high of 4826 points to register a low of 4609 points. The index then went on to rally by another 100-odd points. The volatility witnessed on Wednesday suddenly died out on the following day. Such volatility is not new to the Indian market. In the recent past, such volatile activity occurred on April 17, 1999and May 17, 1999. If we scan or price data further, we can still find days when the market behaved abnormally. Such days are rare, but when they happen, they can be devastating to any person caught on the wrong side of the market. The market opened with a huge gap and continued to rally further. The Wednesday's trading formed a long black candle. This formed the bearish 'dark cloud cover'. The bearishness on Wednesday was forgotten as Thursday resulted in a long white candle. The trading day on Friday resulted in a 'Doji'. Now we have a problem of sorts. We have a case where the index has resulted in a new high and at the same time there is an overhead candlestick pattern, which could have bearish implications. The reason why we are saying bearish implications is because there is no confirmation of a change in the short-term trend.

The weekly charts have also formed a long white candle, which is a bullish sign. In such a case of contradicting information on the price, the only thing we can do is wait forthe price action to unfold. The strategy for the week should be to keep a close watch at the level of 4,810 points. As long as this level is intact, we are reasonably sure that the uptrend is intact. As long as this level is intact, we assume that the market is likely to continue its rally. And if the index makes a new high during the week we are still in an upswing. But if the index breaks below the level of 4810 points and continues to head lower, the market could see a correction to around 4688 points. The chances that the market may head higher is high and once the index registered a breakout above the level of 4896 points and the breakout stays the market could head to higher levels and that is around 5,000 points. The supporting indicators are all showing all round bullishness. The MACD (Moving Averages Convergence Divergence) is in a buy mode and it is above its equilibrium level. The weekly MACD is also in a buy mode. The 14-day RSI (Relative Strength Index) is also in a buy mode and it has shown abreakout from its inverse head and shoulder pattern. The market is bullish but there could be some hiccups. Traders should close watch the level of 4810 points. And if the market registers a new high it could still rally to around 5000 points.

Siemens

The price of the stock has registered a classic breakout above Rs 344. The trading activity has also seen a great deal of acceleration. The weekly MACD is also in a buy mode. Price of the stock does show a potential to rally to around Rs 500 in the medium term. One may consider buying this stock at current levels with a stop loss below Rs 365.

Ion Exchange

The price pattern shows an inverse head and shoulder pattern. Notice in the chart pick up in volumes that have taken place over past several weeks. The appropriate price to enter in is above the breakout level of Rs 52. The price of the stock may rally to around Rs 75 in the medium term. One may buy with a stop loss below Rs 45.

IPCL

The price of this stock has shown a classicbreakout from its symmetrical triangle. This is a fairly long three-month-old pattern. And the breakout signifies a crucial development in the stock price. The price of the stock can rally to around Rs 160, which is a very important resistance level. Once this level is cleared the price can rally to around Rs 180. One may buy this stock at current levels with a stop loss below Rs 127.

Bajaj Auto

Notice in the chart that the price is going in a range of Rs 472 to Rs 511. This is a very profitable trading range. The risk on the downside is limited to just below Rs 465 and the potential on the upside is to Rs 511 and maybe more. One may consider buying this stock at around Rs 472 for a target of Rs 511. Keep a stop loss below Rs 465.

ACC

The price of the stock has registered a breakout above the level of Rs 250. One may buy this stock at current levels for a target of Rs 275.Keep a stop loss below Rs 250.

The author can be contacted at shahmani1@yahoo.com