Will Greek shares continue their rally?

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January 23, 2013
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January 25, 2013

The Greek General index continues to rise towards new 16 month highs. Below you can see the weekly chart updated for current price movements. As you can see it moves according to our expected direction.

gdweekly

Our last entry signal was given at the area of 872 with 3 out of 4 indicators green. Our bullish view that the Greek stock market is at the verge of a very important trend change was mentioned more than 6 months ago. With the completion of 5 upward waves this trend change will enable us to be more positive about the future. The stock market always discounts ‘good’ news, and I hope that is why it has rallied from past June and more than doubled. Banks on the other hand have been left behind during this 5th upward wave, leaving us with thought that the recapitalisation of the banks might be the reason. Therefore we believe that the end of the recapitalisation will find the General Index correcting in wave II as depicted above and together with the banking sector will the 3rd upward wave start. Untill then we have to be sure that wave ‘I’ has ended. As shown below, the daily graph of the General index, prices still continue their upward move within the yellow channel and confirming our wave count.

 

 

GD

 

 

If this proposed wave count is correct, then it must be expected soon prices to top for wave I. At recent levels, wave 5 is equal 0,618 times the length of wave 1 and 3. At 1060, wave 5 will be equal 1,618 times wave 1. These are Fibonacci targets that are common for finding the end of 5th waves. Concluding, we are happy that the longer term trend is changing in Greece as this has very positive implications for the entire country and our longer term positions in the specific market. In the short-term, increased cautiousness is needed as the market might be close to ending this 7 month rally. The General Index has still not provided any negative short term signal.

As always, thank you for taking the time to catch up on my thinking.

impulse-wave-rules

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.