Eurozone In Strong Uptrend, But Overbought?

Eurozone In Strong Uptrend, But Overbought?

By David Rogers. May 14, 2017. BLOWING ROCK, NC — Propelled by stronger retail sales in spite of rising prices, as well as invigorated interest in sectors such as financials, particularly in Germany as the British pull out from the European Union approaches, Eurozone equities have been flying since December.

Whether Donald Trump’s “populism” impact in the U.S. is affecting the rest of the world or not, in our BRN Time Flex Study, shares of EZU have been “overbought” since January and continue to climb higher without so much as a meaningful price correction, yet.

Oldtimers among the chartists will say that price gaps in charts are made to be filled, so might warn that the big gap up on April 28th is problematic for Eurozone bulls. For us, the biggest problem with the bearish case is that we have yet to see any kind of non-confirmation in our BRN Time Flex Study when looking at a WEEKLY chart.

In a DAILY graph, only the slightest of divergence in the BRN Time Flex study has yet to be reinforced in On Balance Volume divergences. This suggests to us that any price decline will be relatively short-lived, at all, until these technical conditions deteriorate because they evaluate what we describe as the “internal” strength or weakness of a market.

That said, the higher that EZU climbs into the area between the horizontal red-dotted lines drawn in the chart, the more likely it is that at least a short-term top will form.  In looking back at the mid-2014 top over $44.00, volume was relatively light compared to the weeks since.

It is interesting to note that the low point in EZU’s price chart closely corresponds to the June 23, 2016 referendum in the United Kingdom to leave the European Union. The price chart since suggests that the European Union may do just fine without British membership.

This report is for informational purposes only and should not be construed as a buy or sell recommendation. Any such decision should only be made in consultation with a professional advisor with consideration to an investor’s investment objectives, experience, tolerance for risk, tax impact, as well as other potential considerations. Blowing Rock News receives no compensation for producing this report. It is offered without cost to the reader, who may do with the information provided as he or she sees fit.

WEEKLY CHART: EZU — iShares Eurozone

About The Author

As Editor and Publisher of Blowing Rock News, David Rogers has chosen a second professional career instead of retirement. For more than 35 years, he served in the financial services industry, principally in institutional equity research. He grew up in the oilfields north of Bakersfield, California and was a high school English major and honors student. From an economically disadvantaged family background, he worked his way through college (on grounds crew and in dining hall, as well as advertising sales for college newspapers), attending Johnston College at the University of Redlands, Claremont McKenna College, and California State University, Bakersfield. Other jobs to pay for college included a Teamsters Union job in South Central Los Angeles, a roustabout in the central California oilfields, and moving sprinkler pipe and hoeing weeds in the cotton fields west of Bakersfield. Rogers' financial services industry career took him from Bakersfield to La Jolla and San Diego, then to Chicago, New York City, San Francisco, Newport Beach and Charlotte before arriving in the High Country in 2000 to take a volunteer position coaching the rugby team at Appalachian State University and write independent stock market research. He spent three years as a senior financial writer for a global financial PR firm with offices in Los Angeles, New York, Shanghai, Beijing, Tel Aviv, and Frankfort (Germany). Rogers is the author of "The 90% Solution: Higher Returns, Less Risk" (2006, John Wiley & Co., New York). He is married to wife Kim (Jenkins Realtors), and shares in the joy provided by her three grown children and five grandchildren.

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