Despite weakness in the Euro and European debt concerns, we have yet to see significant weakness or a breakdown in the DJ Euro Stoxx 50 ($STOX5E). This index is the Dow Industrials of Europe. There are 50 stocks representing 9 countries and 18 industry groups. French and German stocks dominate the index, while finance-related stocks (14) form the single biggest industry group. It is a good cross-section of "core" Europe. While there are concerns with "peripheral" Europe, these have yet to spread to the Stoxx 50 Index.
Click this image for a live chart
The chart above shows the Stoxx 50 Index remaining in an uptrend overall with a rising wedge taking shape the last six months. A lower high could form as the index never made it to the April high. Major support is based on the October low and lower trendline. A move below these levels would call for a continuation of the April-May decline. The indicator window shows the index relative to the S&P 500. The Stoxx 50 Index was outperforming from May to September, but then started underperforming in mid September. While relative weakness in the Stoxx 50 Index is a potential negative, it has yet to turn into absolute weakness.
