Contrary to their Northern brethren, Portugal, Italy, Ireland, Greece and Spain peaked in October 2009. What followed is now history, and it is widely claimed that Greek problems will be contained.
Below is a GDP-weighted composite index of stock markets of countries listed above. Combined, their GDP is 90% that of China (in nominal USD) – so this is no small fish. I present my favoured scenario in this daily chart. The declines so far have been impulsive; rallies corrective. Of further note is the fact that 55 and 85 day moving averages are falling, and the 55 day one is about to cross the 200 day one from above (bearish).
An alternative scenario for this funky group is presented below. While it is certainly possible that PI(I)GS will fly in what would be a massive "C" wave higher, I consider the outcome unlikely. This will change should we get closes above January 2010 levels, which would confirm the move since October 2009 as an ABC correction lower, pending further upside.
Originally published at http://observemarkets.blogspot.com/
