As has been widely written, Greek stocks dropped sharply on the re-opening of the Athens stock market after the recent cliff-hanger. In such circumstances it is normal for our systems to generate a bottom extension signal which we ignore – we are measuring crowd behaviour after all and the crowd has been barred from the market since the end of June. In strange circumstances like these, we override our dumb computers as they don’t know the difference between ‘austerity’ and ‘neo Keynesian stimulus’ and have never heard of Yanis Varoufakis.
Now that market has been re-opened for four days and we are still seeing bottom extensions, we start to pay attention to the signals again. There is no doubt that various assets in Greece are cheap right now and there have been some vulture funds circling real estate, food and drink, leisure and hotels – the sun is still shining in the Aegean and tourists will keep coming. Finding willing sellers is a problem however so it is probably better to look at the whole market where there are a few more-or-less tradable instruments. If you like ‘value’ this is probably a good moment to buy. These are only daily-scale signals but a longer-term low point can show up in the daily time frame before there is any hint of a weekly or monthly signal.
Our model portfolio can’t buy this yet, being already quite fully committed to equity markets elsewhere, but some readers may wish to enter. Now is the moment:
