The breadth in the market is strong; as in the recent past several issueshave registered handsome gains over last two weeks or so. This week also sawthe gains being spread over other sectors as well. It is after a long timethat stocks like Tata Power, Century Textiles, ABB have started to go up.

The week was also good for other software stocks. Satyam, HFCLand GlobalTelesystems, also saw a very good rally in the price. The over all breadthof the market has improved substantially over last two weeks as the indexcontinued to rally.

Most traders are awaiting a correction in the market before those who havebeen left behind can join in. Since the low of 3831 points that was formedon May 23, the index has rallied by more than 900 points. This is a big moveindeed.

Those who have missed out on the move would be ruing their fate. There is alot of buying interest at lower levels and that is there for all to see. Butthe market refused to come down and kept on going higher and higher. Theproblem is that a lot of people are going to realise that the market is notcoming down and it could very well turn out that there is going to be a lotof urgent buying at higher levels which could again prop up the market.

But the fact remains that the market is in a very dangerous territory andone wild swing on the downside could rattle many people. Most probably thedownside could be fast and could last only for a couple of days. After whichthe market could again stage a rally.

Last week it was expected that the market rally will continue and once theindex breaks above the level of 4593 points there could be a rally to 4800odd levels. The index made a high of 4797 points before it came down tolower levels. Now the index is poised at very interesting levels.

Notice the down trendline that is formed on joining the levels of 6150points and the high of 5542 points. The level that the price meets the downtrendline is around 4890-4901 points.

During this week this is the resistance level that could attract selling inthe market. This is the crucial resistance level and once it is cleared themarket is likely to rally to higher levels. But probably the market couldattract selling at this level.

If the index is likely to decline then the first sign if weakness is whenthe market breaks below the level of 4656 points. If the index breaks belowthe level of 4656 points there could be some decline to lower levels. On thelower side the index has a strong support at the level of 4488 points and abreak below it the index could decline to around 4259 points.

The week started on an optimistic note and the index continued to rally tohigher levels. On the last trading day of the week the index formed abearish black candle suggesting weakness in the market. But this is patternis still to be confirmed. First sign of confirmation is if the index breaksbelow the level of 4656 points. Traders must be careful about entering in athigher levels.

The supporting indicators also are still in a buy mode. The MACD is aboveits equilibrium level. The 14-day RSI (Relative Strength Index) is also justbelow its oversold levels. The market may face selling at around 4890 pointsand traders are advised to be cautious of entering in the market at higherlevels.

Century Textiles:
The price of this stock has just shown a breakout form its resistance levelof Rs 50.50. The price breakout has been with a very good increase involumes. The price could see a rally to around Rs 65 in the medium-term. Onemay buy the scrip at current levels with a stop loss below Rs 46.

Tata Power:
The price of this stock has seen a big bull run over last couple of weeks.The price has formed a big white candle on the weekly charts. This suggeststhat the price may rally to higher levels. The price has virtually noresistance till around Rs 90-95. This should be our initial target for theprice to rally. One may consider buying this stock at current levels with astop loss below Rs 60.

IPCL:
This stock has also registered a big breakout from its resistance level ofRs 66. The breakout has been with a very heavy increase in volumes. Theprice of this stock has been with a very good increase in volumes and alsothe MACD has turned into a buy mode. The price of this stock may see a rallyto around Rs 93 in the medium term. One may buy the stock at currentlevels.

NIIT: Buy long
The price of this stock has closed just above the resistance level of Rs2215. The price may see a straight run to around Rs 2460 in the coming week.One may buy the stock at current levels. Keep a stop loss below Rs 2,160.

Pentafour Software: Sell short
The price of the stock has formed a big black candle on Friday's trading.The price of this stock may see a big drop to around Rs 479 in the shorterterm. Traders may see this stock on break below Rs 596 and keep a stop aboveRs 631.

-- (The writers' e-mail address is shahmani1@yahoo.com)