The Epic Battle of BULLS and BEARS

 I have not written my morning notes for the past one week or so. Therefore it is important for me to state my position upfront. I am long from 4925 levels and will cut my long positions and go short only below 4872 on the futures.

As I look at the market on a weekly chart, it conveys an interesting story of a very tough battle between the BULLS and the BEARS. After the rout of 2008, the BULLS had regrouped, helped by a new weapon called QE1. This new weapon and its subsequent weapon the QE2 had helped the BULLS to regain lost territory. The onslaught was so strong that the BULLS managed to regain the entire territory lost in 2008 by Nov 2010.

Just as the victorious army of BULLS was celebrating and thinking of ways to eat further into the enemy camp, the BEARS unleashed a terrible war with a new weapon called EDC (Europe Debt Crisis). From Nov 2010, the tide turned and the BULLS started retreating. The retreat turned into a rout in Jan 2011. However some BULL generals called it a strategic retreat before a push for final victory. They regrouped at a place called Nifty 5100 and planned an attack into the BEAR camp. The troops fought hard, egged on by the promise of a newer version of their favorite weapon i.e. QE3. When that weapon failed to materialise the BULLS lost hope and the BEARS were able to push them back easily. The lack of fear of the new weapon helped the BEARS whose weapon the EDC had only grown in strength. The demoralised BULLS ceded territory all the way to Nifty 4700.

Since then the BEARS have been pushing back every BULL onslaught with relative ease. However, the amount of ground ceded by the BULLs have been diminishing and currently the BULLS have launched a back to the wall kind of onslaught from their most strategic place called Nifty 4500. They know it is a desperate time for them. If this current onslaught does not succeed and if they are not able to take away the BEARS from Nifty 5400 position that the BEARS have held for a long time, then it is only a matter of time before even the Nifty 4500 stronghold of the BULLS is breached and Nifty 4000 is threatened.

The fact that their position is desperate is giving the BULLS the strength for an all out and last ditch attempt to break the BEAR ranks. The much delayed weapon QE3 has not yet materialised but the talk that it is now near at hand is helping the BULL generals to keep the morale of the troops up. In any case, when the fight is about survival, then very little morale boosting is required. Survival instincts is enough to make the army fight harder.

In this epic battle, I do not know who the winner is going to be. Nor do I know whether this will really be the Final War to end all Wars or just another battle in this eternal battleground between BULLs and BEARs. However, it is true, that this battle waged by the BULLS currently has a greater chance of winning, simply because they are fighting a battle for survival. If they manage to reconquer the hallowed Nifty 5400 levels, then maybe we can see them push for more territory after a period of regrouping.

Finally, to reiterate, I am long and will cut my long positions and go short below 4872 levels.