``While the indices closed with sharp cuts on weekly basis, an encouraging formation has emerged on the daily chart called `positive divergence`. On last Wednesday, when Nifty closed at 4,919, way below the previous closing bottom of 5,018 made on May 7, the RSI did not make a new low and in fact made a higher bottom. Subsequently, on Friday, while the benchmark plunged all the way to 4,842 intraday, it rebounded sharply to close at 4,931, higher than the Wednesday`s close with RSI too closing above Wednesday`s level. This is very encouraging sign and raises the hopes of bottom being formed around current levels. While a follow up action is required by the benchmark in terms of making a higher-top higher-bottom formation to take an outright bullish view on the market, it is certainly advisable to book profits in short positions. Even long position can be considered with a stop loss of 4,842, the weekly low made on Friday. On the upside, a sustained trading above 4,980 can take the Nifty to about 5,100. On the downside, 4,842 is now a crucial support, as a major trend line support connecting bottoms of November 2009 and February 2010, exists there. ADAG and Mukesh Ambani group stocks might see some action after an announcement from Ambani duo that they have scrapped the earlier non compete agreement, which prevented them from investing in industries where other was present, ``notes brokerage house Anagram.
4,842 is now a crucial support: