Vienna Stock Exchange
Today we thought we would look at an obscure stock exchange and try and get a sense of the small portion of the picture in Europe as we build towards our understanding of what is really happening around the globe. We start of by looking at a Monthly chart of the ATX index which comprises of 20 different stocks in the index.
From a classical chart pattern perspective we seem to be stuck in a triangle like pattern. It has obviously been a very trying time for local investors as the domestic stock market has moved no where or even negative based on where your initial investment was made.
We will drill down to a weekly chart from the lows of Mar 2009 and try to make sense of this pattern using the Elliott Wave methodology.
From an Elliott Wave perspective we have seen an impulsive 5 wave pattern from the lows of March 2009 to February 2011 before markets corrected in a long drawn out fashion as various concerns about Greece and the European financial institutions and the lack of growth in the continent have been front and centre in the news. As you can see from the chart above we have seen an ABCDE correction that has taken the better of 5 years to complete. So if the correction is complete should we be bullish the ATX Index ?
Looking at the ATX index versus the Euro Stoxx 50 Index we can see it has comprehensively broken above the downward sloping trendlines making us bullish on a relative basis.
Looking at the ATX prime index which is a broader index that contains 40 stocks and comparing it to one of several Risk Allocation indicators we have built and that has given fairly good risk on risk off signals we find that more recently the Risk allocation indicator has gone into risk off mode.
However, looking at an Elliott Wave chart of the move higher since February 2016 we do not have a very strong conviction on how this pattern is playing out and given the expansion of wave 5 in the subsequent move higher from June 2016 we will wait and watch how this pattern unfolds.
So our analysis leads us to being relatively long ATX vs the large cap Euro Stoxx 50 index but be cautious on an absolute basis. The recent strength in European financials has been impressive and given Erste Group Bank makes up 20% of the ATX index we are comfortable in being long on a relative basis.