Greek Stock Market Reaction to Bond Spreads News

10-year-greek-government-bondGreek bond spreads have taken a dive lately from 950 to 650 basis points, but stock news doesn’t help Greek stock market to regain momentum. The downtrend of the Athens Stock Exchange General Index seems endless, although there are signs of hope. The daily graph shows a broken trend line and there is MACD divergence in the weekly chart, but I’d be surprised not to see a short term fall in the following days. The weekly graph includes major reversal patterns of the recent uptrend, indicating a quite possible retracement and we just hope the index doesn’t break below 1,383, which was the last lowest low of the last decade occurring in June 2010!

According to the weekly graph of the Athens Stock Exchange General Index the support level found at about 1,400 has been verified 3 times in the past, defining it as a very strong support not willing to let the downtrend continue below that. On the other hand the downtrend is quite obvious pointed out by the blue trend line. As a glimmer of hope, the last fail bottom encourages for long entry but it would take much more than that for investors to trade against the long term trend. And that is where MACD divergence comes along, indicating an imminent strong reversal. Otherwise, we will be talking about a huge share prices’ fall in the coming months, if the support level is overcome. When such a strong level, either a resistance or support one, in such a long term chart is broken, we’d better hold positions in favor of the move or we stand to lose a lot of money.

Having established the reasons behind a possible bounce back of the Greek Stock Market’s General Index, we should take a closer look to the Index’ daily graph. Things don’t look that promising there, apart from the fact that the recent down trend line has been broken. However I expect a short term downtrend in the next days, since the Index is nowadays at the upper Bollinger Band, there is no MACD divergence and today’s candlestick formation is a credible reversal formation, if the market closes there or below in 3 hours. I believe we should wait until November to enter the market if we are long term investors, as a probable uptrend signal could form in next month’s S1 pivot point, adding a lot more confidence to our decision. We should expect a nice candlestick formation above 1,447, which accompanied by Pivot Point verification should provide excellent conditions for an entry point.

Finally, the 60-min graph includes MACD divergence in the recent short term uptrend and that is why I believe we won’t be seeing higher stock prices the next week. Since 1st of November is also Monday, new weekly pivot points would help us enter the market even better than the monthly pivot points in the daily chart. Combining both daily and 60-min graphs can provide very useful information in order to trade profitably the next weeks. Setting a stop loss close to our entry point 5would prevent from risking lots of money in a market that may end up trading even at 1,000 Index value. And as we said, your stock portfolio must be empty if the Index value drops suddenly. There will be surely signs in the 60-min charts, don’t wait for the weekly chart to prove we were wrong.

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