The sensex made a determined bid to regain lost ground on Thursday. It opened with an upward gap of 122 points. An extremely volatile session followed with the sensex swinging wildly between 5620 and 5816. The sensex finally managed to end the day at 5810, with a gain of 2.97%.

The yo-yo like movement between 5620 and 5820 seems to be charting out a flat correction. This pattern seems like the second three wave pattern in a double three under formation since the high of 6150.69 (14-02-00). As per this count, there can be another dip on Friday and the correction from 6150.69 will end there. This dip should end around 5600.

A more rapid vertical fall on Friday would mean that the third from the high of 6033.98 is unfolding. This wave can cause a sharp fall to 5549 and beyond that to 5389. In case the sensex stays above 5700 on Friday, that would imply that one part of the correction was completed at 5620 yesterday. The sensex can be heading for the 6000 level once more.

As far as the larger picture is concerned, a broad correction is presently underway since 14-02-00. The sensex could swing wildly between 5500 and 6200 as the pre-budget and post-budget speculations unfold. The intermediate term trend is still up and the indicators in the weekly chart are also in buy mode. A post-budget spurt has a target of 6313, 6742 and then 7436. We will stick to the earlier resolve of staying long till the sensex closes below 5500. The more risk averse traders can stand aside till next Thursday.

The downward risk at this stage is that a long-term top is in the process of forming. There will probably be one more spurt before a long term bear market commences. Most of the blue chips are in a long term down trend already. Even if the long-term downtrend starts, the first wave down will get support on the 4800 – 5000 zone. So that is our immediate risk.

The sensex closed near the higher end of the trading range on Thursday. This rally may trickle down on Friday morning as well. The immediate upward targets are 5844, 5856 and then 5872. If the sensex turns down after a brief rally, a dip to 5700 or below is likely. A spurt beyond 5900 can take the sensex to 5961.

If the opening is weak, the immediate downward targets are 5781, 5763 and then 5734. If the sensex halts short of 5725, a sideways movement in a narrow band between 5700 to 5850 can go on for the rest of the day.

A rapid fall on Friday can halt at 5689, 5614 or else at 5539.

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