The markets completed the "hound of baskerville" pattern as the previous session's fall was more than covered and the indices logged a fresh high.

The close was lower as a key reversal was recorded (close was lower than the open) and the intraday high of the session was the significant high of the current upmove. The traded volumes spiked to record levels, adding to the frenzy, as distribution was seen at higher levels.

The market breadth was negative as the combined exchange figures were 1450:2473. The capitalisation of breadth on a commensurate basis was negative as the figures were Rs 5372 cr:Rs 32,187 cr.

The F&O data for the previous session indicated a 5 per cent decline in net long positions on unwinding.

The indices have closed at the lower end of the intraday range and that too on record volumes. The close is indicating a Gann swing reversal inflection point and unless the 5737 level is overcome on convincing volumes, a fresh upmove may be elusive in the near term.

The coming session will see a range of 5065 on declines and 5640 on advances. Due to the higher volatility (the market wide implied volatility is 64 per cent), the daily ranges will be broad and specialist activity will come to the fore.

Retail traders run the risk of being overwhelmed by organised players. The markets lack depth, as was proven by Thursday's trading data. Bulls need to watch the 5450 pivot, below which the Nifty will remain in the bear court.

The outlook for the markets on Friday is abundant caution as the weekend factor, rising crude prices and overseas cues will play a large part in determining the short term market trend.

The current phase will throw up multiple pincers and triangles on hourly charts and be a tricky time for the unsophisticated traders. Trading exposure should be cut down and capital preservation must be the key concern for now.