The first half of 2019 saw stock market indices around the globe rebound sharply. In the U.S., NASDAQ, DJIA and the S&P 500 are up 22.7%, 14.8% and 18.9% since the start of the year, respectively. In Europe, the German DAX and France’s CAC 40 both climbed 17.8%, UK’s FTSE 100 surged by 12% and Italy’s FTSEMIB is up 19.4% since January 1st.
But the index that beats all of the above comes from an unexpected place – Greece. The Mediterranean country that was on the brink of default just a few years ago. Since 2010, the total amount of money the IMF and the European Union had to devote to save Greece amounts to 289 billion euro. Yet, Greece is home to one of the very best stock markets in the world in 2019.
While this may come as a surprise to many, it is not as startling to Elliott Wave analysts. A little over a year ago, we expressed our bullish opinion on the Greek stock market in an article titled “Greece is Better and Elliott Wave Confirms It.” Our optimism had nothing to do with politics or economic reports. Instead, it was based entirely on the daily price chart below.
On June 29th 2018, the daily chart of the Athens Stock Exchange Index revealed that the recovery from 421 to 896 was a five-wave impulse pattern. To everyone familiar with the basic principles of Elliott Wave analysis, this meant two things.
One, impulses point in the direction of the larger trend, so the ASE was already in an uptrend. And two, a three-wave correction had to fully develop in wave (ii) before the uptrend can resume in wave (iii). Over a year later, this is how the Greek benchmark looks today:
Wave “c” of (ii) kept dragging the index lower until it reached 593 in November 2018. This level coincided almost perfectly with the 61.8% Fibonacci level where second waves often terminate. In this case, the Fibonacci support caused a sharp rebound to as high as 900 earlier this week.
This brings the ASE’s total return from the bottom of wave (ii) to 51.8%. Not bad for a country that was on the verge of insolvency not too long ago. However, trends don’t move in a straight line and this is valid for third waves, too.
As visible, the rally from 593 to 900 also has a five-wave structure. It is labeled 1-2-3-4-5 in wave i. This means that before the bulls return, a small three-wave pullback in wave ii can be expected. Investors willing to gain exposure to the Greek stock market should view it as a buying opportunity. The big picture outlook remains positive.
Did you like this analysis? Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!