The daily charts of sensex/nifty have formed bearish engulfing pattern and more than half the gains of last week have been wiped out. These are signs of reversal. The trend is likely to turn down once the recent lows on sensex/ nifty at 8632/2662 get breached.

As mentioned in the weekly outlook, the U.S. economic data lined up for the weeks ahead may not be encouraging. President Obama has also warned that some more banks could fail in the times ahead. His bailout package may not pep up the markets even if it gets a nod from the reluctant Republicans. Rather there would be lot of hiccups before it gets through. By then the markets would have trended lower.

Therefore, keep the sentiment biased towards negative this week until sensex closes above 9400 decisively though, it needs to give a close above 9800 to turn things more positive. Initiate fresh short positions on nifty with every rise and with stop loss at 2900 or a final stop at 3000 for more risk taking traders.