The gains in the US market were the best Monday in over two months, but technically some of the global markets are acting even better. MoneyShow’s Tom Aspray sees some interesting opportunities in two out-of-favor Euro markets.
Last Friday’s rebound lacked real power, but Monday’s surge in the global stock markets was impressive even in the US, which has borne the brunt of the selling over the past two months.
The rally has helped to relieve the US market's short-term oversold status, but a bottom does not yet look complete. The S&P 500 has strong resistance in the 1,395 to 1,405 area, and needs a close above 1,435 to signal that the worst of the selling is over.
So who has been leading the rebound? The technical picture for some of the overseas markets looks much better as some of the best performers Monday were a couple of unloved Euro markets that beat the S&P 500.
The iShares MSCI Italy Index (EWI) was up 3.3% and iShares MSCI France Index (EWQ) gained 2.9%. The daily charts of these two ETFs show typical continuation patterns that suggest the worst of the selling may actually be over. Moody’s slight downgrade of France’s debt on Monday has been mostly factored in, I feel, and it may provide a better entry level.
These overseas markets continue to warrant a closer look, as they may be some of the market leaders as the global stock markets try to rally into the end of the year.
Chart Analysis: The iShares MSCI France Index (EWQ) has 50% in its Top Ten holdings, a yield of 3.2%, and an expense ratio of 0.52%. The daily chart shows that EWQ rallied from the July low at $17.83 to a high of $22.76 in September.
The iShares MSCI Italy Index (EWI) is even less diversified than EWQ, as it has over 70% in its Top Ten holdings. It has a higher yield of 3.3% and an expense ratio of 0.51%.
NEXT: A Look at China ETFs