In a previous post we argued that the Athens General Index was in wave 4 and that a final fifth wave to new highs was to be expected. The index recently made a new high confirming our bullish view. Another positive sign is the larger trend change that is under way after two destructive years. As shown in the weekly chart below, prices are moving according to the wave count we posted a few weeks ago. Nothing has been changed in the chart except the updated prices.
Prices not only move impulsively upwards, they manage to break out of the cloud. Our initial target is around the 1000-1100 level. This 5th-wave rally, however, has no banking help. Banks due to recapitalisation and funding problems have been lagging if not declining during this wave. That is why we have to be cautious until things become clearer in the banking sector in Greece. Most probably, the sector needs time to stabilise and it seems that wave II is going to cover that problem. The third wave is expected to include a huge bank rally.
Taking a closer look at the rising form of this index, we see an overlapping pattern during the last few weeks. As seen in the chart below, prices ended wave 4 exactly where we expected and have moved higher since then making higher highs and higher lows.
My view is that the rally will end when the last low and/or the dotted yellow channel line is broken downward. This happens if the 833 price level is broken. Until then I expect at least one more pull back and a new high. There is however an even more bullish wave count that we should keep in mind. If this overlapping move is just 1-2 waves, then an exploding couple of waves 3 of 5 are expected to push the index above 1000 toward 1100 and why not 1200. For this to happen, the sentiment around the banking sector must improve considerably.
Disclosure: None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions.
Prices not only move impulsively upwards, they manage to break out of the cloud. Our initial target is around the 1000-1100 level. This 5th-wave rally, however, has no banking help. Banks due to recapitalisation and funding problems have been lagging if not declining during this wave. That is why we have to be cautious until things become clearer in the banking sector in Greece. Most probably, the sector needs time to stabilise and it seems that wave II is going to cover that problem. The third wave is expected to include a huge bank rally.
Taking a closer look at the rising form of this index, we see an overlapping pattern during the last few weeks. As seen in the chart below, prices ended wave 4 exactly where we expected and have moved higher since then making higher highs and higher lows.
My view is that the rally will end when the last low and/or the dotted yellow channel line is broken downward. This happens if the 833 price level is broken. Until then I expect at least one more pull back and a new high. There is however an even more bullish wave count that we should keep in mind. If this overlapping move is just 1-2 waves, then an exploding couple of waves 3 of 5 are expected to push the index above 1000 toward 1100 and why not 1200. For this to happen, the sentiment around the banking sector must improve considerably.
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Disclosure: None of the information or opinions expressed in this blog constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this article constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions.
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