Zombie Dance

The Zombie War continues. I had written a note earlier on this subject in my note titled  "Nightmare on Wall Street". In that note I had said that our Zombie market story is in an infinite loop. It starts with the market grinding down down slowly as the market participants start worrying about some European nations ability to pay off its creditors. Notice it does not fall sharply because already there are rumors that some bailout will be stitched in place. As the weeks draw out, the market continues to fall, but slowly. Then a meeting is scheduled. By the end of that meeting a bailout is announced or it is announced that the Govts will do "whatever it takes" to calm the markets. The markets react joyfully, killing all the shorts. After that has happened, suddenly, almost on cue, the market again starts worrying that the bailout will not be sufficient to prevent a default in the future.... leading us back to the situation where the market starts grinding down slowly as the market participants start worrying about some European nation's ability to pay off its creditors....and so on in an agonising slow Zombie dance.

I truly hope for my own sake that this "whatever it takes" will, just this once, lead to some truly radical measures. If the Europe problem can be somehow consigned to the backburner, then we can get back to worrying about country specific issues like the slowdown in China, the lack of governance in India, the fiscal indiscipline of the US, the Iran problem etc. There is no dearth of problems.

But we have learned to handle these problems because we lived through them in the past and we can expect them to be papered over in the same manner it has been done in the past. What is key for the market is that this Zombie menace in Europe is resolved or at least contained at the earliest so that we can get on with our lives and start making some money in the market!

As of now, the Nifty has rallied substantially and has moved above my buy level of 5203 in a huge gap up. I bought when the first 5 min high was crossed at 5250. Fingers crossed now and hoping that the markets will not react down as it usually does after forcing me into a long position!