It is longer still since I annoyed my many Irish friends by calling a major high on their stock market in February 2007, accompanied by a strong sell recommendation at 9631. Today I take a look at the ISEQ Overall again, and determine whether the recent progress towards recovery has further to go.
For the purposes of today's analysis, I will look at the chart from the major low in March 2009, ignoring all the lead-up analysis to the great unravelling of the Irish economy and accompanying destruction of its share index. The initial rally from this low faltered following a rise of 83.33%, at a level of 3446. This is an unusual Gann-theory percentage, being a combination of both a 'quarters' and 'thirds' rhythm, ie (66.66% + 100%) x 50%. After hitting 3446 in September 2009, the index then entered a period of correction, before again re-testing this level in April 2010. There followed a long period of sideways trade with a negative bias, supported in turn by its G4 and G3 levels. It was not until November 2011 that a break above the G4 line gained traction, with the index going on to complete a rise of 33.33%.
Most importantly, in January this year the Overall broke above 3446, allowing me to double that initial rise of 83.33% to one of 166.66%. The line representing this 166.66% projection aligns perfectly with the G1 level at 5014, and becomes my ultimate target as a result. Further support to this level comes courtesy of a 100% projection from the secondary low in November 2011. The 730-point rise in the index required to achieve this level leaves upside scope of around 17%.
Recommendation: buy. Target 5014. A small area of resistance lies waiting in a band defined as 4730-4768. Traders may look to book profits at this level and await a lower entry point. Stop-losses may be applied on weakness beneath 3970.