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Why 95% of Traders Fail

Dow New Stock Market All time High as Greece Surrenders to Germany

Stock-Markets / Stock Markets 2015 Feb 21, 2015 - 12:40 PM GMT

By: Nadeem_Walayat

Stock-Markets

The Dow stocks index set a new all time high Friday, closing up 155 at 18,140, that actually marks the first new all time high of 2015 as the Dow more than recouped the weakness that began late December that had seen the Dow fall to a low of 17,037 by the start of February.


The mainstream financial press like lemmings immediately jumped onto the Greece deal bandwagon to explain why stocks had just hit a new all time high, this despite the fact that the Dow's climb to new all time highs had been in motion for some 3 weeks which was in the face of relentless euro-zone bearishness not just from Greece crisis negotiations which the Germans had just the day before rejected as a Trojan Horse offer and refused to budge an inch from the existing Euro 240 billion bailout terms as illustrated below, but also due to economic weakness across the euro-zone.

"The Greek letter is not clear at all, but opens immense room for interpretation. To mention the three most important points: It includes no clear commitment to successfully conclude the current programme and its falls short of a clear freeze of Greek measures. It is totally unclear how the Greek government wants to pay its bills over the coming weeks with the current shortfall in tax receipts.

This is why the letter is not in line with the last Eurogroup position. It rather represents a Trojan horse, intending to get bridge financing and in substance putting an end to the current programme. On this basis it makes no sense to start drafting a Eurogroup statement on Friday. We should aim at three things now:

First, the three institutions should carefully examine the Greek current fiscal position in relation to the letter and give us their advice, as agreed in the last Eurogroup, whether on the basis of the Greek letter a successful conclusion of the current programme would be possible, with a sufficient primary surplus and debt sustainability to be assured.

Second, we need a clear and convincing commitment by Greece, which may just contain three short and well understandable sentences: "We apply for the extension of the current programme, making use of built-in flexibility. We will agree with the institutions any changes in measures from the existing MoU. And we aim at successfully concluding the programme".

Greece Surrenders to Germany

Friday's announcement amounts to a humiliatingly near total climb down by the Syriza government as it gave up at least 80% of the demands that were being made in the face of an accelerating run on its banks. Even the 20% that it retained will likely be further whittled down over the coming week as it is clear that Germany runs the euro-zone and that despite Syriza propaganda, nothing has changed to what the Greek government can do to the state the nation was in before the January election. Therefore the ONLY option the Syriza Greek government has is to either leave the Euro-zone or continue to follow the German economic austerity medicine all the way towards completing the reform of the corrupt Greek state.

My long standing opinion is that the only workable long-term solution is for Greece to LEAVE the euro-zone, else it is a case of perpetual depression coupled with useless elections that elect government with no power to do anything as the can keeps getting kicked down the road, which in today's case is 4 months down the road when Greece will be back threatening a euro-armageddon exit.

Stock Market 2015

In terms of the prospects for the stock market, my recent in-depth analysis concluded in the following detailed trend forecast for 2015 that expected a volatile trend during the first half of the year, that in the first instance targeted a new all time high before the end of March 2015 that has already just been achieved.

The Dow resolves to a bullish Elliott Wave pattern i.e. implies that the Dow should now embark on a trend to a new all time high, probably before the end of March!

03 Feb 2015 - Dow Stock Market Trend Forecast 2015 by Nadeem Walayat

Dow Stock Market Forecast 2015 Conclusion

My final conclusion is for the Dow to spend the first half of 2015 in a wide volatile trading range as it continues to unwind the 2014 bull run and sets the scene for the next series of bull runs to new all time highs. I expect the Dow to have started its bull run by early August off of an summer low and then continue into the end of the year, punctuated by an October correction low. I further expect the Dow to be trading well above 19,000 during December 2015 and probably above 19,500, before closing at around Dow 19,150 for a 7.5% gain for the year as illustrated by the following trend forecast graph for 2015.

Dow Stock Market Trend Forecast 2015

The bottom line is don't be frightened by first half weakness, yes it may look grim if we see the Dow trading under 16k, but all it would represent is a deeper buying opportunity before the market resolves to above Dow 19k.

What's Next?

The Dow having achieved the upper end of its first half trading range, therefore the Dow should now imminently target a trend lower towards the bottom end of this trading range which at least suggests that 3 weeks from now the Dow will have traded down to at least 17,000. I am sure the lemmings that commentate on markets in the mainstream press will conclude 'after the fact' that the drop in the Dow was due the unraveling of the Greece deal as the Greek population increasingly revolts in response to Syriza failure to carry out its mandate / election promises that could even result in the Syriza government disintegrating prompting another election. Or for press focus looking for signs of Czar Putin's unconventional war spreading to the Baltic nations.

Source and Comments: http://www.marketoracle.co.uk/Article49530.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

jgizzo
10 Mar 15, 12:39
Goldman doesn't see a Euro Exit

"In other words, sorry Greece: you are stuck: according to Goldman you can't go back to the Drachma, even if you wanted to."

http://www.zerohedge.com/news/2015-03-02/can-greece-just-print-drachmas-goldman-answers


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