We had a weak follow through day and now a distribution day on Sensex

Sorry for not being regular and not updating the site for the past few months. Was caught on the wrong side in the July rally, but have made very good amends since then and I am now almost up YTD from April now (its really tough to be counting exactly!).
Anyways, back to my take on markets:
I didnt have a really strong view for the last 10-15 days. We overdid the rally from October lows by bouncing as much as 40%+ in 5-6 days on not so great volume. So, at that point, it was tempting everyone to short and then we overdid on the down side by falling for 7 days continuously. So, we have been range-bound for most of November.
Back to december, I still dont have a very clear view, but I will state some of my observations.
The original rally started from Oct 28. It gave a follow through day (FTD) on Nov 4th. The sad thing was a distribution day immediately followed the FTD and so the rally immediately became weak. Besides that, it had already come up 40%+ in 5-6 days.
On 14th november, the 3rd distribution day on nifty, i counted the market rally as over. Since then, we have neither gone up much nor down much.
A new rally started from 21st Nov. (Note that we didnt really break the previous Oct lows and so some people may say that the previous rally from Oct is still on.) It has NOT YET given a FTD day. Counting the 1st day and until now, we have had 1 accumulation and 1 distribution day - clearly no trend whatsoever on low volumes.
On the Sensex however, we have had 1 FTD on 26 Nov 08 and so that makes it 2 accumulation days (including FTD) and 1 distribution day. However, the FTD only had 7% more volume than previous day.

This rally looks more likely to fail than succeed - but a clear direction can appear only on breaking 2500 on closing basis and in that case, there is a STRONG chance of going to my final targets for the indian markets - 1800-2000 range on NIFTY.

Few stocks have meanwhile looked strong, but not too strong yet: NTPC is one of them.
I have reshorted all original shorts about 10 days back and they are giving me minor profits at this time - we probably will have another 1-3 distribution days before we break 2500.

Based on analysis of previous bear markets, I believe we will make it to 3500-3700 range atleast once (maybe twice) in the next year (2009). But, we will not cross 3700-3730 in 2009, no matter what. Ofcourse the market view is so bearish that not a single person agrees with me that we will goto 3700.

DONT GO LONG yet. Market is too weak right now.

Mutual Funds: I reviewed many of them and they are all very well placed. High cash levels. Stay invested in the good funds. Continue SIP. In addition, I am planning to buy a bit extra below 2500 nifty (only mutual funds), and then average down with higher amounts to invest until 1600.

Futures: I hope to go long in nifty futures from 2000 and average down (pyramid) until 1600 (no SL) and will then hold for 3500-3700. Very risky, and it is indeed going to be very rewarding if it works.