Greece is the word.
The Athens Stock Exchange General Index is one of the few global stock indexes in the final stage of completing a large base, both with its price and versus the
S&P 500 Index.
Bullish price action for an international stock market in the face of the U.S. dollar’s strength this year is an amazing accomplishment.
Why Greece? Strategic importance. Piraeus is the largest deepwater port in the Mediterranean Sea area. China purchased a two-thirds ownership of the port of Piraeus. While not a 100% purchase, it could rival the purchase of Alaska as a savvy geopolitical chessboard move.
The monthly chart above shows that a nine-year base is in its late stages, which is part of an even larger double bottom that dates back to 2012. With a bullish “1-2-3” bottom, the Athens index has been consolidating in the upper portion of its base. Holding the 800 area and then hurdling 990—it’s currently at 893—would generate upside projections to 1300-1400. The chart suggests the purchase of Greek assets will bear many fruits.
Volume flows are powerful (see chart above). Notice that even as the Athens index traded sideways between July-September, volume flows climbed strongly. Because volume leads price, my work projects that the Index has considerable upside potential over the long term.
Finally, the chart above—which shows the Global X MSCI Greece exchange-traded fund (ticker: GREK) versus the S&P 500—illustrates Greece’s powerful relative strength. The ETF’s two-year base against the S&P 500 is on the verge of breaking out.
If the Athens index could outperform our stock indexes in the face of a strong U.S. dollar, imagine what it could do if the dollar substantially weakens.
Andrew Addison is the author of The Institutional View, a research service that focuses on technical analysis.
Write to editors@barrons.com
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