A Look at Europe

I want to take a look at a couple key countries within Europe. From the news it's no secret that most of these countries are not doing well, displaying ominous fundamental factors such as high bond yields, high debts, and tough Austerity measures. I want to technically put this in perspective with the US markets.

S&P 500 (for reference):

Germany:

Considered the powerhouse of Europe, Germany put in a big peak in May of 2011 and proceeded to fall over 70%.  For reference I consider anything more than a 25% drop to be a bear market. It followed the American markets into the beginning of 2012 with a rally, but obviously just from eyeballing the charts this rally had none of the strength the American markets had. Moreover, it did not follow the recent American rally that started in June. I cautiously think Germany is basing out, but recognize it can face more downside due to the fragility of Europe.


Italy:

Above you can see a weekly chart of Italy going back eight years. I purposely chose this chart to illustrate that Italy is currently at the lows from the 2008 financial crisis. This point seems to be acting as support, with Italy getting a recent bounce off that point. If this level breaks it can spell real trouble for the Italian markets.


Spain:

Here is Spain with the same time frame as the Italy chart. Here you can see Spain has already broken its 2009 low and is finding support at a level from the early 2000's. An important principle is the farther away the support or resistance level is from the current price, the weaker that level becomes. Indicating that Spain has the weakest markets of the three charts so far.

Greece:

Here is a chart of the National Bank of Greece. The only ETF of Greece I found, GREK (Global X FTSE Greece 20 ETF), I find not to be useful with its short time frame. Obviously you do not need me to tell you Greece is in bad shape though. This chart above shows that the Greek bank is hitting multi-year lows, a massive decline from over $70.00 to barely over one dollar.

Turkey:

One European country doing well is Turkey (Wikipedia says it's part of Eurasia). It is experiencing a nicer smoother rally compared to the choppy American rally. Moreover, it is above all its moving averages, so one cannot be bearish on it.


Final thoughts: Keep in mind many of the other important European countries such as Ireland, Portugal, France etc... These countries must also be carefully watched to have a full analysis of Europe. The American Federal Reserve and European Central Bank's recent promise to do whatever it takes to keep their respective economies doing well can probably be pointed to as the reason for the recent bounce in the markets, especially Spain and Italy. Please leave any comments or questions!