LIMBO

I am long on the Nifty and as I said yesterday, I am not in a happy place. I will cut my long and go flat if Nifty futures trades below 5304. I will not go short currently at least.

As expected, we have not heard the last of the European debt crisis. The post solution party has ended even before it fully began. In such a situation, what kind of long term view can be taken in this market? The situation Europe is in currently can best be described by the film INCEPTION. In that film, a dreamer who dies in a dream will go in a state called LIMBO where he can exist literally for ever and cannot wake up to reality unless someone kills him or he kills himself.

This does not mean that Europe needs to kill itself to wake up from this state. What it does imply is that something drastic needs to be done to cure the ills of the continent. It cannot be solved by a simple band aid solution.

Europe is already in a state of LIMBO currently which would be alright because everybody has a right to choose their state of existence. The fear of course is that in a globalized world they will drag everybody with them into it. The problem with this state of existence from a traders perspective is simple. The market will not make large moves at all. It might exist in a very tight band of around 15-20% for a long period of time and that is the worst of all punishments that you can think for me.