LunaticTrader

Investing with the Moon

Posts Tagged ‘Greece’

Does Google already tell us how Greece will vote?

Posted by Danny on July 5, 2015

A lot of eyes are on Greece today. How will the people vote in the referendum on the EU bailout diktats/proposals? Pollsters are telling us it is too close to call. But maybe there is a much easier way to foretell how this vote will go.
Google trends allows us to see which search terms are becoming more or less active/popular over time. So I used it to see what is happening for “oxi” and “nai”, the Greek terms we see in nearly every article on the topic. This is what it cranks out for search from within Greece (click image to enlarge it):

oxi_nai

Source: http://www.google.com/trends/explore#q=oxi%2C%20nai&geo=GR&date=1%2F2015%2012m

This shows the trends for the last 12 months. We can see that both search terms have shot up recently, which is not surprising of course. What is more surprising is that search for “oxi” has been significantly bigger than search for “nai”. This can have several reasons. Maybe there is a majority that is going to vote no (oxi) and that is being reflected in more Greek search hits. Or maybe the people who intend to vote yes (nai) do not use the internet as much as the no voters. That could be the case if a majority of older people intend to vote yes. Or maybe the truth is somewhere in the middle.
By tomorrow we will find out if Google trends offered a better indication than the opinion polls.

Danny

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Buy Athens

Posted by Danny on June 22, 2015

The Nasdaq reached new all time highs last week, the S&P 500 and the Dow didn’t. Meanwhile all eyes are on Greece and on how its standoff with the EU gets resolved. More on that at the end of this post. Let’s have a look at the S&P chart first (click image to enlarge it):

S&P 500

The S&P 500 is trying to rally to new highs. Price action remains confined to the very narrow range that started in March. A breakout above 2150 would tell us that the bull market continues. But that remains to be seen because we are just starting a new lunar red period.
Technically it doesn’t look bad. The Earl (blue line) and MoM indicators are going up nicely and the slower Earl2 (orange line) is tentatively turning up from a shallow bottom. But can the market do it? It is still in the balance.
The lunar cycle has correctly pointed the way all year and is now 12 for 12 in 2015. But that streak will not last forever. Sooner or later we will have a red period in which the market climbs strongly, or a green period in which the market drops significantly. And whichever comes first is likely to show us the direction of the next major move in the US markets. Lunar cycles tend to show up most clearly in a sideways market (like we have had this year). When the market is in a strong bull or bear trend the lunar cycles are more easily overcome by the broader trend. That’s why we now look for the first failed lunar period to bring us some important indication.

Will news from Greece push global stock markets one way or the other? Maybe. As chart of the week we will have a look at the Greek stock market. I have commented on the Greek crisis on a few occasions. In February 2012 I pointed out that news of a 130 billion Greek bailout was a contrarian sell signal. That turned out to be a good call, as in the next 6 months there were two significant sell-offs in US markets. Here is what I wrote back then:

The media will try to sell the new bailout of Greece as good news, but is it?
1) This Euro 130 billion bailout amounts to Euro 12000 (~ $16000) for every person in the country. What is it going to be used for? Is it going to be “spent”? Or is it going to be put into some productive investments? If so, which ones?
2) How is it going to be payed back? By whom?
3) And what if Portugal or Spain demand similar “help”?

All questions that are still equally relevant today, now more than 3 years later.

I picked up the Greece theme again in September 2012, pointing out a major buying opportunity based on my Earl indicators. Greek stocks more than doubled in the ensuing 18 months, so that panned out nicely.

And here we are, with Greek stocks once again hitting rock bottom levels. This is a weekly chart for the Athens stock exchange (ASE) (click image to enlarge it):

Athens

The index stays well above the lows it reached in mid-2012. All my indicators are showing major bullish divergences. That doesn’t mean lower lows are not possible, but this is the kind of setup that favors a significant rally in the medium to long term.
I would buy with one hand if Greece stays in the euro, and buy with both hands if it leaves the euro. First upside target is near 1500, and if it gets above that resistance then look for 3000+ in the longer term.

Danny

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What will Greece do?

Posted by Danny on February 6, 2015

What can it do?

I am getting some questions about Greece. Will it leave the Euro? Will the EU fall apart? Will Russia bail them out? Will the market crash? The new “marxist” government’s moves are being watched and reported on a daily basis. Even the clothing of the new ministers has become “news”. And the finance minister describes himself as a “libertarian marxist”…? What to make of all this? I have the good fortune to be able to spend a good deal of my time in this ancient country, so let’s do one article for it.

First, two observations:
1) The eurocrats in Brussels and traditional parties around Europe are scared. They are not so scared that Greece will leave the euro or fall into an even deeper crisis, because then they can always say “told you so”. They are much more scared that the Greek economy would improve too much under this new government. It would be most “inconvenient” for the politicians that be if a country recovers by refusing EU “help”. So, whatever happens in the next months, if the result a few years down the road is that Greece is growing faster than e.g. Italy or Spain, then what are voters in those countries going to think? That puts the EU in a delicate balancing exercise.

2) The newly elected government parties in Greece cannot afford to go along with all the EU demands, that would be political suicide for them. But the going idea is that this new government has very little leverage and will be forced to bend to EU and ECB demands very quickly. Is that so? If it gets pushed too far this government will probably “experiment” before it bends.

But, what can it try? To solve that question we may have to take a look at Yanis Varoufakis, their new finance minister who has become a household name within a week. He describes himself as a “libertarian marxist” and an erratic one no less. That gives us a clue as to possible courses of action. They may try something that resembles the “miracle of Worgl”, an experiment based on the ideas of another libertarian economist Silvio Gesell. This experiment in the 1930s depression worked so well that the French prime minister visited to see it. In fact it was so successful that 200 neighboring towns in Austria wanted to copy this idea and that’s when the Austrian central bank moved in to stop it. Could Greece borrow from these ideas? Why not? In the comments on an article about bitcoin which was posted by mr. Varoufakis over a year ago, I noticed this exchange:

gesell

The new Greek finance minister responded and thanked for the idea. That suggests to me that he is familiar with Gesell’s ideas and how they can be used in a country that is in depression. Greece could indeed issue an electronic parallel currency that would become used alongside the euro, similar to what was tried already by Freicoin. It could be presented as a kind of social program, much like the major of Worgl intended 80 years ago, putting a lot of jobless Greeks to work and at the same time it would generate new tax revenue (based on the demurrage fee). This new currency would circulate fast, as there is no point in trying to save a currency that has a monthly demurrage fee. This could revive the local economy in ways that the euro will never do. As the Greek government uses that new electronic scrip for its social programs it would have more Euro left for other purposes, like repaying its debts. What’s not to like?

How would the markets and its EU partners respond to such an initiative? That’s hard to tell. But I don’t think there is any EU law that could stop Greece from trying this. And it may be one of the cheapest forms of social program they can try. Instead of just giving free electricity or food to people, it makes more sense to give them some “social scrip” and then let that new “money” circulate, lifting the economy out of depression in all those cities and villages where the remaining euros have become stashed away in mattresses.
It is one of the things they may try. It would also mean they stay in the euro but get something like their own drachma back at the same time. I doubt this government will bend down to EU pressure without trying something new. And this is something that has worked before in similar circumstances. Would it work again? I don’t know. Anyway, if Greece goes “Gesellian”, you heard it here first.

Danny

Posted in Market Commentary | Tagged: , , , , , | 5 Comments »

 
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