- New Science in old markets -

Greece makes a bottom extension, Germany approaches support. News on the turn

There has just been a daily-scale bottom extension in the Greek stock market – it closes earlier than the others, so we are seeing this signal during that part of the trading day while more westerly markets are still open. We advised short-selling this and other Southern European equity markets in the March 15th edition and now this looks like a good time to take some cover. Greece has fallen by 16% since then, about 12% of which was capturable from our advice and the figures for Spain are 9.6% and 8%. Spain was our preferred choice of short and this is a tidy profit – even though we expect that prices will soon fall further. Perhaps take partial profits here, looking to re-short a bounce back up to the levels of the compressions shown on this chart of the Dow version of the Spanish market:

We would not advise going long of the Southern Europeans here (or anywhere at all in the foreseeable future) but we do like Germany for reasons often given. This recent weakness across Europe has brought Germany equities down to the level of some recent compressions, where we expect support:

This is a good chance to buy some more German equities, to add to the many other ‘buys’ that we have advised over the last few months and years. It is worth repeating here that we especially like real-estate stocks if their holdings are in the major cities of the former West Germany. Don’t buy anything in the former East. These purchases in Germany should be regarded as medium and long term in nature, as opposed to our more frequent short-term trading advice.

The turn that we were expecting in stocks over the period 21st to 25th March now appears to have marked a high point. This is still not very clear but the odds do favour it.  Accordingly, we now advise shorter-term traders to mount a short-selling campaign in US equities from here.