#psi 20

Can Portugal Stocks Spark One Last Hurrah For The PIIGS?

The topic of our Chart Of The Day on July 10 was Portugal's PSI 20 Index. It was all the rage in the morning headlines as it was down some 4% on the nation's banking concerns and global markets were selling off in sympathy. What we wanted to show with our chart was the fact that Portugal's issues had been building for some time. Indeed, the PSI 20 was already down some 20% before that day, with scant coverage. Additionally, as we indicated on our chart, the index was already nearing a major level of support (potentially). We should not be surprised, given the media hoopla, that the market essentially put in a bottom on that day, rallying as much as 8% over the last few weeks.

Now it is retesting those lows. This retest could be the moment of truth for the PSI 20, and possibly for the PIIGS countries, in general. The PSI 20 closed below the previous low today and has slightly undercut the key Fibonacci Retracement levels we had identified as support. However, thanks to an intraday bounce it did manage to close on the uptrend line from the 2012 low. A successful retest could provide for at least one more short or intermediate-term rally in the PSI 20. This could provide a catalyst for the other PIIGS markets to rally as well from similarly vulnerable conditions.

If a stock market crashes and nobody reports on it, is it still a crash? Today's ChOTD looks at the recent (and ongoing) carnage in Portugal's PSI 200 stock index.

As of this morning, the PSI 20 is down around 24% from its April 2 high. And while it is finally getting some media pub today (thanks to global stock markets selling off), it had dropped 20% to yesterday with scant coverage. That's pretty remarkable given that 20% "technically" denotes a bear market, for those into such labels. It's a good lesson for macro types to keep one's eye on all markets at all times. Typically, the next catalyst will come from a spot where the collective eyes are not focused.