The market opened with the Sensex at 4676, a jump of 46 points over the week end close of 4630. But it could move up by just 5 points to post the intra-day high of 4681. If bullish traders looked for hope in this high, which was 24 points higher than the previous high of 4657, the low for the day at 4582 dashed these hopes. The later was lower than the previous low of 4597. The index closed at 4586, losing 44 points day over day.

The daily stochastic indicator has cut downwards through its average, triggering a sell. The RSI indicator is hugging its triggerline and is currently staying above it. The ROC indicator is still in the positive territory.

Looking at the A group portfolio, two aspects surface. Price erosion is taking place in several scrips very slowly. This would indicate that the price settling and market dynamics are not exactly set for a bear attack. But then, a continued weakness could engender a threat. The threat of another breakdown, similar to what happened at the beginning of November. It would appear as if a nerve testing game is being played right now.

If major players stay off from purchases, it could lead to nervousness, and ultimately they can look forward to a panic break down. As prices hit bottom, it would offer them the opportunity to make attractive picks. The number of advances have come down at the BSE from 770 to 764 with advance volumes going down from Rs 1,664 crore to Rs 1,133 crore. The number of declines have gone down from 1,038 to 957 with decline volumes ballooning from Rs 570 crore to Rs 1,229 crore.

With not much upside movement, you might as well prepare a short list for your picks and their price levels, should the market break down, momentarily. The last breakdown lasted just 5 minutes! Sensex slipping below 4540 could lead to that event.