Looking for Short Term Italian Strength Against Germany
- Posted by Greg Harmon
- on February 26th, 2013
The elections in Italy threw Europe and then the rest of the world markets into turmoil Monday. But by the end of the day in US trading there were some signals that the Italian move might be over done. The ratio chart of the Germany iShares, $EWG against the Italian iShares, $EWI, pierced through the highs from April and then July of 2012 before pulling back. The solid Black candle shows the price movement was bearish intraday, showing relative strength in Italy over Germany after the initial move higher. It would not surprise many if it filled the gap below, a bounce back in Italy stock prices. Many were calling for a bounce based on overreaction during US market hours. But it will not happen Tuesday, as the ratio is continuing higher. The bounce back may not happen
at all. The technicals show that the Relative Strength Index (RSI) is is bullish for this ratio and the Moving Average Convergence Divergence indicator (MACD) is moving higher on the signal line and is positive and growing on the histogram. These support a continued move higher in the ratio, showing more strength in Germany over Italy. This fits with the rising trend support seem in the chart. Translation: Say Auf Wiedersehen or Arrivederci too any thoughts you have about looking for a big Italian bounce back relative to the German markets.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Top Trade Ideas for the Week of April 20, 2015: The Best
- SPY Trends and Influencers April 18, 2015
- Macro Week in Review/Preview April 17, 2015
- Dragonfly Capital Views Performance through April 2015 Expiry
- Unlocked: Premium Earnings Trades for Morgan Stanley and Hasbro
- Premium Earnings 4-17-15
- Revisiting the oil to bond ratio (spoiler: its not too late)
- Unlocked: Schlumberger and General Electric Earnings Trades
- Release the brakes & hit the gas in Wabtec
- Premium Earnings 4-16-15