Greek Debt Optimism Boosts European Funds: 5 ETFs for the Next 5 Days
European debt crisis?! What European debt crisis?!
That seemed to be the message from traders who bid European stocks higher in recent days, sending exchange-traded funds like the ^EWQ^ and the ^EWG^.
Both EWQ and EWG have closed higher for four out of the past five trading days. The French fund was up just shy of 3%, while the German fund added more than 3%. Even the ^EWI^ has gotten into the act, also up four out of the past five sessions and adding more than 3% ahead of trading on Friday.
What does all this mean to traders? All three of these ETFs are trading below their 200-day moving averages, a dangerous place historically speaking, for short term rallies. More often than not, short term rallies beneath the 200-day moving average are unsustainable and tend to result in similarly short term reversals back to the downside when these rallies rech overbought levels.
And the higher these funds climb below the 200-day moving average, and the deeper into overbought territory they trade, the more likely those short-term reversals will be.
Traders looking for opportunities to buy into the fear in Europe may be able to pick up funds like these at lower prices – or, at least, at less overbought conditions – in the next few days if history is any guide. And those who see opportunities in the possibility of these funds moving lower are increasingly seeing the edges shift toward their side.
*
A quick note on the exchange-traded funds from last week. Both the technology-related funds – the ^TYH^ and the ^QLD^ – have since made signficant gains. Three days after making our 5 ETFs for the Next 5 Days roster, shares of TYH were up 11%, while QLD gained more than 6%.
The gold funds from last week’s list have moved up from oversold territory, with both the ^GLD^ and the ^IAU^ gaining approxaimately 1% ahead of trading on Friday.
Get The Stock List: 7 Stocks You Need to Know delivered to your inbox every evening after the market closes. Click here to start your free subscription today.
David Penn is Editor in Chief of TradingMarkets.com