Let us go a little earlier in the chart, say the period between 14th and 19th Feb (marked by 2). We can see in this that the price continued to make higher bottoms while the RSI, at the same time, continued to make newer lows. This is known as a bearish divergence or a negative divergence between the price and the RSI. This means that this uptrend may soon be broken but a confirmation will come only when the price breaks the trendline. So even though the divergence came on 15th and 18th but it was not confirmed until late in the afternoon on 19th. Going a little earlier in the chart between 11th and 13th, another bullish divergence is visible at the place marked 3.
A technical analyst should realize that visibility of a divergence is not a signal to buy or sell, it is only an indication that the trend may change. A divergence has the same relationship with price that dark clouds have with rain. Visibility of dark clouds is only an indication that rain will come but it is not certain that it will rain till it actually does rain. For all one knows, the dark clouds may be blown away by the wind before it rains. Similarly, a divergence is an indication that the trend may change but till the price actually breaches a trendline, there is no certainty that it will. Divergences also do get ‘blown away’ occasionally. Fortunately, today it has made it certain that we may see a new uptrend now. But, since we are looking at 30 minutes charts, the trend may last for a very short period of time.
Hindalco Industries has broken out of a W pattern (alos commonly known as a double bottom pattern, apparently, with low volumes. But these low volumes could also be attributed to the weak sentiments in the markets. Buying above 191 with a stop loss of 174 may give us a target near 220. 
Infosys Technologies, and all other software services stocks have shown some good recovery in the last few days, which could be attributed to the fact, that the rupee has gone down versus the dollar. Infosys is still looking good on the charts. It seems to have broken out of a downtrending pattern and looks all set to go up. A noticeable fact is the, not so encouraging, volumes. But, a trade can be taken because of the low (comparatively) risk-reward ratio. Buy above 1650 with a stop loss below 1470 for a target near 2000. 
Ranbaxy is also showing a bullish pattern. We have already mentioned Divis Labs in this newsletter which is looking good to buy. Other pharma stocks like Aurobindo Pharma and Dr. Reddy are also showing strength but because no particular buy signal has come in them, therefore, they are not discussed here. This suggests that the whole pharma pack is looking strong. The thing to consider here is that since the whole sector is looking attractive, hence buy signals in this sector may be more reliable than the others. Ranbaxy, if it is able to cross 425 is looking very attractive and is showing a target of around 500. The only negative in this pharma giant is that it has a very wide stop, at least at the moment it does. The stop loss is at 340 right now but if the price were to cross 450, we could increase the stop to 415-420. But, be sure that you buy only if it were to go above 425.
Steel Authority of India (SAIL) is very close to its resistance line. It may find resistance here, or it may breach the resistance. If it does breach it, then it should be a good opportunity to buy. One may buy it if it goes above 240 for a target of 290. This also has a problem of a wide stop of 180, to start with, but risk averse investors may keep a stop below 219 to protect heavy losses. Indications are that it should be able to breach its resistance this time. Yet, the reader has to ensure that she buys it only when it crosses 240. Ignore all price movements in the first 30 minutes.
I’ve never seen a more interesting chart than this. Sasken Communication Technologies. Notice the decline with very low volumes in mid December and mid January. Notice the volumes now. Notice the series of doji candles (doji candles are those candles having the open and close at the same level) in the last 10 days. What does it indicate? Accumulation? Distribution? It is down 70% from its top and still showing dojis? There is something serious going on in this stock. I would say that, at the risk of putting my foot in my mouth, it is a wonderful stock to buy at current levels. The stop loss, technically, is below 119 but one can keep a wider stop also to suit one’s risk appetite. Worth a mention here is that like Infosys, even Satyam Computers, Tata Consultancy and Wipro are also looking good, though they are not discussed in this edition of the newsletter. Due to space and time constraints, they are not discussed today but one can pick them up at current levels and we will discuss them tomorrow.
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