The Guessing Game on the Greek Haircut | Elliott Wave International

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The Guessing Game on the Greek Haircut
The more uncertainty in the air, the clearer Elliott wave patterns become

By Susan C. Walker
Thu, 03 Nov 2011 18:00:00 ET

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Greece's on-again, off-again referendum on the bailout has been roiling world markets and keeping everyone guessing about what will happen next. This week, while Prime Minister Papandreou played brinkmanship with the opposition party about agreeing to the terms of the eurozone's bailout, Merkozy (Germany's Merkel and France's Sarkozy) played their own game of chicken with Papandreou, saying that the eurozone would defend the euro with or without Greece.

And now everyone wonders what kind of deal Greece's bondholders will get once all the negotiations have played out. Will they take a 50% haircut? Or as much as 90%, if Greece defaults completely?

Fortunately, while the guessing game goes on about Greece, EWI's European Financial Forecast editor, Brian Whitmer, combs through the conflicting messages and points out what really matters.

In the new, November 2011 European Financial Forecast (which publishes Friday, Nov. 4), he writes that no matter what politicians do, Elliott waves in stock market charts tend to become clearer as uncertainty blooms.

It's hard to be much more uncertain about what's going on politically in Europe now -- and yet the wave patterns are getting quite clear. That's why Whitmer was able to show 6 charts in the October 2011 European Financial Forecast with this headline: "March 2009 was a Low, not the Low." Here's what else he had to say:

"Meanwhile, evidence that the continent's decade-long correction is breaking new bearish ground just keeps growing. We've previously shown, for instance, that Greek stocks have already come underneath their March 2009 lows. The Portuguese PSI index achieved a similar bearish benchmark last month, while the Eurostoxx 50 and stock indexes in France, Italy and Spain are a bad week or two away from breaching their commensurate lows. These are not trivial markets. The unified nature of their share performance and their clear Elliott wave patterns speak volumes about the continent's likely future..."

Get a leg up on Europe's future: First, catch up on the October European Financial Forecast right now -- and get an instant email notification when the November European Financial Forecast goes live on Friday, November 4 >>

Tags: bailouts, debt crisis, Elliott wave, European Union (EU), euro, euro stoxx 50, eurozone, europe, european central bank, European debt crisis, European Union (EU), eurozone, Greek debt

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