Do you believe in logic? Are you a logical trader? There are times you wished you were irrational beings. Today was one such day. Indian markets did everything that defied logic. Uncertainty roaming the political corridors at large and yet Bulls did not want to take a breather from buying spree!! What were they celebrating? Do they already know the outcome of the General Elections and are factoring in victory of a market-favourable-party? Today you want to scream "YES". And why not!
Despite all logical conclusions, today the Indian markets closed with commendable strength. Nifty gained 78 points and closed near its day high, a clear testimony to the fact that Bulls were totally in control with not an iota of doubt in their minds regarding the future direction of markets. But just wait a moment. Don't get carried away.
Markets always did exactly opposite to what most on the streets expect. If there is tsunami, earthquake or a terrorist attack of major proportion, markets always exhibited bullish behaviour. So in that perspective today was no different. Uncertain results of General Elections and prospect of a hung Parliament are all playing in the minds of the Big Bulls. But they are not willing to let you know that. And what better way than to do big time buying to hide their fears? Retail investors should not take any cue from today's buying pattern, because the big guns will pull out money suddenly once most of us are lulled into believing that buying is the only virtue in this market.
In my previous post on 07 May 09 I had indicated that the upper ceiling that Nifty has is 3770. Till the time that ceiling holds we have a situation where no buying should be contemplated by retail investors. For momentum and swing traders the game is still on. Day traders who have a compulsive nature will of course trade. But just be careful for wild swings. For heaven's sake don't get trapped on both sides of the trade and get butchered by fierce volatility.