It is hard to believe, but the Athens Stock Exchange General Index has lost over 88% in value since peaking in November 2007. It has fallen from 5346 to 625.
Compare it to Iceland, a country that went bankrupt. That index collapsed from 8238 seen in July 2007 all the way down to 378 in March 2009, a loss of 95%. From that low, it went to 608 in Oct 2011. Cool cash for the careful punter!
Now back to Greece. Let�s start by looking at the weekly chart of the Athens Index.
It is immediately clear that we are in the fifth wave of the decline. Elliott Wave Principle suggests that when a five wave move finishes, we should expect a recovery back to the prior fourth wave level.
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The fourth wave finished around 3000 in the index. Of course, the recovery will take a good deal of time, but we are not talking here of day trading. The key, then, is to identify the terminal point of the fifth wave.
Elliott Wave Analysis of Athens Main Stock Index
The second chart looks closely at the fifth wave. That impulse wave should itself be made up of five sub waves, and it looks like we are in the fifth of the fifth wave. The current momentum is still pointing strongly to the South, so you don�t have to run out and buy anything today. But it is certainly the right time to think about what stocks you would want to own in your portfolio. (If you are an overseas investor, you will also face the currency risk, and who knows if the euro will be around next year! )
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