The general indicator’s secret weapon

By Apostolos Manthos

The general index of the Athens Stock Exchange closed in February with a new high of 3075 days, thus completing five consecutive months of growth since the end of last September. The rate of rally over these months is now 44%, with the index escaping after eight years from the shackles of heavy resistance to the 950-1000 unit area.

Indeed, in recent weeks the benchmark has developed even more speed, adding yet another high-octane “secret” weapon to its composition, which has led it to record an upward slope of over 83 degrees. A little more, the height will be vertical. We are talking about the share of Piraeus Bank, which surpassed almost everyone else and ranked second with a participation rate of 7.20% in the movement of the index, behind Coca Cola HBC, which is relatively close to 8.59%.

Look no further than the “previous” runner-up, OTE, because it changed its “tyres” and is 12th behind GEK TERNA. However, in addition to Piraeus, significant changes have also occurred in the first eight “regulatory bodies” (EEE, PEIR, ALFA, ETE, EUROB, MYTIL, BELA, PPC) now controlling just under 50% of the overall index by 24 % to be “tabletop”.

At the same time, the entire long-term scenario on the monthly price chart seems to have turned for the better in favor of the patient buyers as the medium-term range that opened to the March 2014 highs extends from 1350 to 1380 points. Of course, this does not mean that the index will head to these price levels tomorrow, as the road leading there extends until April 2024, so in the meantime it has the opportunity to go through several stages of downward correction and continue upward without deviating from its path. Basic rise scenario. Volume-dependent oscillators are particularly positive for the long-term trajectory of the index, as it is now beginning to catch up with the urge to approach 2017 levels, which were almost double the current levels.

This is from the point of view of the long-term chart analysis of the general index, as in the case of the short-term analysis, it seems that the rise is nearing the end of its cycle, and it is looking for a bearish stop and re-examination of some chart points in order that it occurs in the medium term and an appropriate contraction of the “overbought” levels superior” in technical momentum indicators. The breach, which is getting closer and closer, is likely to happen in the next bullish units of the index, which could be from 1130 to even 1165 units. Especially now, after most of the restructuring of the MSCI index has been completed. The first signals will mainly come from a 3-day candlestick capture with a large upper shadow blocking the buyers and closing with a negative signal. In case the start of the short-term bearish wave is indeed confirmed, the first target is at Fibonacci Speed ​​Resistance Fan between 1075 with 1055 points or -6.5% of yesterday’s closing 1129 points.

Another worrying element, always speaking of the short-term landscape, comes from the technical Relative Strength Oscillator (RSI), which has found itself in the stratosphere of an overbought condition reaching numbers seen since… 2006. And we are talking about the RSI (Relative Strength Index (RSI)). 21) on the 3-day price chart is relatively slow. The point here is that the index may rise slightly, but statistically, as long as a broad bearish pullback does not occur, the accumulation of strong buying “force” will subsequently lead to a more violent bearish release that will take longer to collect. Of course, if this phenomenon occurs in the value of stocks, we will report it as a consequence as we have seen many times that dynamic companies continue for a long time to swim in overbought areas without a significant downward correction. However, in major stock market indices, the cooling statistic of technical oscillators cannot be ignored.

* Apostolos Manthos is responsible for technical analysis and investment strategy