Round One to Reliance bulls....... Many more to go.

The battle lines which were drawn yesterday saw action today. The bulls -- after having been beaten so badly for the last few days decided that enough is enough, especially when the Bearstry to hammer down the all-time favourites --the reliance pack. the bears should have known better than to finger the already cornered bulls. My eyes had been longing for a long time to see a tall white candle -- and I wish were granted.

The white candle as fully engulfed the Black candle made yesterday -- meaning that it signals a bullish engulfing pattern. This should provide a relief rally that may in its best take us up by 15 to 20 per cent. In just today one days rally the Slow Stochastics red line has crossed over the blue line and started looking good. It has also crossed over the 20 marker. RSI has moved up from the oversold zone. The MACD red and blue line divergence has reduced. The StochRSI however has moved from near Zero (oversold) to near 80 - though is in overbought zone - but what a move. If we move this way today too, we will definitely hit the overbought zone in StochRSI.

In yesterday's euphoria and one bullish candle let us not forget all the other things that will affect us. Oil has made another record high and US fell like sh#tting bricks. DOW down 1.46%, Nasdaq down 2.32% and S&P500 down 1.82%. Asia took the que and has opened in red. Nikkei down .97% but if I see it correctly - seems to recover -but opened too low. Just by the way - Japan's main stock index fell for the 10th straight day — its longest slide since 1965. Strait Times too is 1% red on opening.

On the other hand DLF buy back will instil hope in the market. At a time when the CPM top brass in Delhi are preparing to withdraw support to the Manmohan Singh government, the CPM in West Bengal has suffered yet another electoral defeat on Wednesday after it lost as many as eight of the 13 municipalities to opposition parties — Trinamool Congress and Congress. Elections to these civic bodies were held on Sunday and results were declared on Wednesday. This should go well with the markets as CPM may think a bit longer to pull the carpet. The indications by other parties to support the Congress in event of CPM ditching the ship too brings hope to the political stability in the country. I am not sure how Mr Reddy's statement made yesterday will affect the market.

So the indication though bullish and has all going well - has to end with a watered down tone because of the Asia opening and the fact that the US will be closed on 4th July and the week will be cut short - I am not sure how many would like to take the longs over the weekend tomorrow. In any case there are those that make hay whether the sun shines or not. But remain careful.

Best of luck to all and take positions deliberately. either way the rewards can be phenomenal and the pain too may be as much.