SOFIX: My new love

As a mentioned several days ago, I decided to divorce the US Dollar. Despite the harmonious marriage with it since December 2013, there was overwhelming evidence that the US Dollar started cheating on me. There were five completed waves which indicated the end of the trend. Moreover, the mass media craziness reached extreme values. Two examples:

– A couple of days ago the national TV released¬†a prime-time “special report”. Analysts made projections for a US Dollar increase of 20% and even 30% in the coming years. Not surprisingly, no one made such predictions at the price bottom.

– The bank cashier looked at me strangely when I wanted to sell my Dollars. I was advised by her not to sell because “it will go higher”. I ignored her. Listening bank cashiers brings me nowhere.

SOFIX Fundamentals: Currently, the Euro is increasing impulsively. It is already 200 pips higher. The move out of the US Dollar seems to pay back.

Consider the opposite now. The main Bulgarian stock index (SOFIX) is never in the news. No one speaks of it and there is a broad negativism about its future development. To a great extent, such negativism is logical. In the last 7.5 years SOFIX experiences three major bear markets. The first time it lost 87% of its value, then another 50% and most recently- just 20%. Currently, SOFIX stands at 499 or 75% lower than its peak in 2007. It is definitely closer to the bottom than to the top. This is why no one speaks about it.

My optimism about SOFIX is fueled by the recent price developments. The index made a three-wave corrective move and finally bottomed in 2012. Since than a 5-wave impulsive move followed for wave 1. The recent correction has brought prices to more attractive buying levels to complete wave 2. This price developments confirm the trend change. The index is not only expected to rise significantly in wave 3, but also to keep increasing for years. Wave 3 is usually the most aggressive and breath taking move which surprises everyone (except the readers of this blog and few others). Moreover, SOFIX has been a laggard. Now it is likely to catch up with the other European indices which are much higher. The growth potential is significant.


The next few years will be very strong for the Bulgarian economy. The so called “fundamentals” will improve substantially.I am optimist simply looking the chart. Charts tend to predict future quite accurately.

I plan to hold the position until everyone starts speaking about it with recommendations to buy. There must be a complete 5-wave structure before I exit. I doubt that the exit will take place before SOFIX exceeds the old peak at 2000 points. These are exciting years ahead.