Greek stock market is set to hit new lows on Monday, as more talk about Greece’s default emerges in Europe and media during weekend. Greek government confronted an angry crowd in the opening of International Fair in Thessaloniki on Saturday, but that didn’t prevent them from imposing a new property tax on top of existing austerity measures. Finance Minister Evangelos Venizelos said on Sunday that the new property tax will be levied over the next two years and will cost citizens an average of €4 ($5.53) per square meter (10.76 sq. feet). No word though on cutting down country’s expenses, as if overtaxing Greek citizens can solve Greece’s financial problem.
Greece pays roughly 12 billion euros for salaries and 7 billion for pensions, while 7 more billion euros are operational costs as SKAI TV, a Greek TV channel, let us know hours ago. Although I can’t be sure of those figures, I am pretty confident the stock market will continue its plunge. The Greek Composite Index will most probably try to break below the support level at 860, proving right all those people who predicted a dramatic decline of Greek stock market a year ago. Back then the index was at the 1,800 area and most of my countrymen couldn’t accept the fact Greece would face bankruptcy. Posters at financial forums argued that the stock market simply couldn’t go lower and we had hit rock bottom, only to be proven wrong a week later.
Even the so-called deal of the century between Alpha Bank and Eurobank wasn’t enough to fill investors with confidence 2 weeks ago. It still offered though tremendous opportunity to make a profit very short-term, as Greek banks’ shares gained 30% in a day! Sellers quickly took over control as banks’ stocks are all trading at the support level, which was formed right on the deal’s day.
Now the market will either verify that support level or break it. Positively thinking, the MACD divergence is a reversal signal along with the reversal candlestick formation. Given the importance of those indicators, a support level fail will fuel even more negative talk. Besides, the most-read articles in Greek financial websites nowadays are mainly posts about leaving Eurozone and printing our old currency, drachma. How much worse can things go?