Major equity indexes oscillated throughout most of the day and ended up in mixed territory as Spain’s debt woes collided with positive economic data on the home ront. Spanish lawmakers caused concerns as they continued to debate whether or not the debt-burdened nation should seek a bailout. On Wall Street, investors cheered on the latest motor vehicle sales report; this figure came in at 15 million, topping analyst estimates of 14.5 million [see also Bernanke Fires Back At QE Critics].
With the limelight still focused on Europe, investors will turn their attention to the latest regional retail sales data for more insights. As such, our ETF to watch for the day is the iShares MSCI EMU Index Fund (EZU, B+), which may see volatile trading at the opening bell. Analysts are expecting for eurozone retail sales to have contracted by 1.9% in August, marking a deterioration from the previous reading of -1.8% [see Euro Free Europe ETFdb Portfolio].
Chart Analysis
This ETF appears to have completed a correction since breaking above its 200-day moving average (yellow line). Since shares bottomed out at $24.77 (blue line) on July 24, 2012, EZU has managed to climb higher along an upward slopping trend line (green line). While the recent dip offers an attractive entry point for those bullish on European markets, this decline may also be the start of longer-term pullback; notice how EZU previously tried, and failed, to summit the $32 level (red line) in late October last year, throughout most of March this year, and again on September 14, 2012 [see also How To Pick The Right ETF Every Time].
Click To Enlarge
Conservative investors ought to consider waiting for EZU to establish definitive support above $32 a share before jumping in long, seeing as this is a major resistance level for the ETF [see also 5 Tips ETF Traders Must Know].
Outlook
If the latest retail sales report paints a gloomier-than-expected outlook for the region, European markets will likely face headwinds; in terms of downside, EZU has support at $30 a share. On the other hand, a bullish reaction to the latest economic data could send overseas markets higher; in terms of upside, this ETF has major resistance at the $32 level. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.
Follow me on Twitter @SBojinov
[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]
Disclosure: No positions at time of writing.
ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.
Are you enjoying ETF Database?
Get more articles like this one via our free daily e-mail newsletter or RSS feed.
Get access to special reports including How To Pick The Right ETF Every Time and Seven Simple & Cheap ETF Model Portfolios.
