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.

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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.

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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