It’s A Debt Party, Profit From It!

The economic problems in the world seem to be growing by the minute. Last week, the European Union did not reach a resolution for Greece. Many investors are wondering what will happen when Greece eventually defaults on its debt obligations. At this time, the European Union is trying to finalize the European Financial Stability Facility (EFSF), which is really another TARP like bailout program. It is still amazing that the central banks and the governments around the world continue trying to resolve the issues of debtor nations by increasing the debt. After all, debt is the cause of the problems in the first place. China is also facing an apparent slowdown in their economy, however, we shall tackle that issue another week. This week, we will look at the European countries and pinpoint some good near term support levels. These levels will provide excellent trading opportunities for intra day trades, and multi day holds.

The iShares MSCI Germany Index (NYSE:EWG) actually made a 52 week low on September 23, 2011 at $17.15 a share. The EWG topped out on May 2, 2011 when it traded as high as $29.04 a share. Germany is still considered the most solvent and productive country in the European Union. Germany is also expected to be the largest contributor of the European bailout. Many German citizens and politicians are not in favor of bailing out the other Euro-zone countries such as Greece.  However, last week the German parliament voted in favor of European Financial Stability Facility (EFSF). This action could ultimately effect the German economy if the bailout fails. Should the near term lows fail to hold as support traders and investors can expect the next short term support areas around the $16.75, $16.00, and $14.00 levels. If by some chance the EWG rallies higher traders should watch for near term resistance around $19.00, $21.20, and $23.00 levels. Note these levels, place them on your charts and trade them wisely.

Next, we shall examine the iShares MSCI Spain Index (NYSE:EWP). The EWP bottomed out on September 12, 2011 at $29.40 a share. Since that time the EWP has made a higher low on September 22, 2011 at $30.09 a share. Last week, the EWP closed at $32.33 a share which was a gain of $1.38 for the week. Should the indexes begin to sell off again traders should watch for near term support around the $30.00 level. The next important support areas are $28.00, $25.00, and $23.00 levels. Should the EWP rally higher traders should watch for daily chart resistance around the $35.50, and $39.00 levels. Spain is one of the leading Euro-zone countries that are expected to default soon if there is no bailout fund passed.

Italy is considered to be more toxic than Spain. The iShares MSCI Italy Index (NYSE:EWI) made a 52 week low on September 23, 2011 at $10.88 a share. Last week, the EWI closed at $11.88 a share remaining off the recent lows. Traders should watch for near term resistance around the $12.75, and $14.00 levels. Should the EWI break below the recent lows traders must watch for support around the $10.60, $9.80, and 7.85 levels.

About Nicholas Santiago 576 Articles


Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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