Make Hay While The Sun Shines

I remain long but will cut the long and go short if Nifty falls below 4933. I hope it does not do that though. I am tired of the non trending market of 2011. Hopefully this year starts off with a nice long trend which sets up all very nicely for a positive year.

While it is all very nice to hope for a up trend in the beginning of the year, it is important to remember that the debt crisis has only been postponed by the unprecedented backstop offered by Fed and ECB in various forms. Volatility, the chief villain, of our 2011 film has been defeated, but only for now, because the two heroes Fed and ECB fought a well coordinated fight. However, the villain has only been subdued not vanquished. This victory has come at a huge cost. The two heroes have expended a lot of effort and are being forced to continue to fight hard to keep the villain at bay. The moment the heroes reduce their effort, the villain is still able to rear his head.

This begs the question: are the two heroes indefatigable?  What happens if they tire? Is this the ultimate strategy of the villain? Forcing the heroes to fight hard and expend a lot of effort just to keep him lying low? Making them fight while he recoups his strength? Is this the villain's way of winning the final war? Letting the heroes tire themselves out while he waits to land the final blow?

If indeed this is the case, then we could be in for a bad second half of 2012. Even then, as all the great thinkers have said, let us live in the present. The villain is at bay and risk on trades beckon us. It is time to go long and make hay while the sun shines.