GREK etf trade idea
The etf has continued to move lower, making higher lows along the way the past year. A look at the chart shows a clear pattern of bulk buying followed by massive selling shortly thereafter.
The higher of two year support levels was broken this past week when the move below 15 was confirmed for a couple days all the way down to 13.50. The etf has now bounced back to above the 15 level of support.
Given the downward pressure momentum, EU and ECB issues, time of year (where nothing will likely get done by the ECB) and multiple voting on the Greek referendum that will take place over the next month (there will likely be multiple votes if past Greek actions are telling of the future), I think the etf will solidly breakdown through the 15 level again and head to the 12-13 range before the voting is finalized in mid January (this is the last possible vote that can happen under Greek law) and the ECB holds their next meeting.
I think the move lower in the etf will happen over the next couple weeks, the lower 12 - 13 support level for the past 2 years will be tested (possibly even broken), but a major bounce could occur again at this support level. I would then buy a healthy lot of shares and trim before the final vote and ecb meeting
I know this sounds like a risky trade idea, but given how predictive the Greeks (and most of the EU for that matter) have been to make major political decisions, I think the risk is minimal if it is watched correctly.
Remember, the trade idea is not valid for me if the GREK does not break lower to the 12 - 13, two year support level. I am NOT buying at the current price of $15.50.
I noted my interest in the GREK late last week on another instablog, so wanted to post my trade idea for those that may be interested.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.