A couple of weeks ago the European Central Bank (ECB) created a new lending facility to the banks in Europe. The European banks could borrow capital from the ECB at 1.00 percent for up to three years. Since the program began there have been over 523 banks that have taken advantage of the lending facility. Many traders and investors expect this to help the stock markets in the European Union, however, the charts on these indexes still look very ugly.
The iShares MSCI Italy Index ETF (NYSEARCA:EWI) is probably one of the most important indexes that traders can follow. Italy is the third largest economy in the European Union. This index is still trading below the important daily chart 50, and 200 moving averages which puts the index in a weak technical position. The 52 week low on the EWI was made on September 23, 2012 at $10.88 a share. This morning, the EWI is trading lower by 0.26 cents a share to $12.24 a share. Traders can watch for major daily chart resistance around the $13.00 level. Until the EWI can trade solidly above that important resistance area the EWI is vulnerable to further declines. Short term traders can watch for intra-day support around the $12.20 and $12.00 levels.
Other leading European indexes such as the iShares MSCI Germany Index ETF (NYSEARCA:EWI), iShares MSCI Spain Index ETF (NYSEARCA:EWP), and the iShares MSCI France Index ETF (NYSEARCA:EWQ) all look very similar to the EWI daily chart. This tells us that the European Indexes are trading together. Traders must remain extremely cautious when looking to own these indexes as they remain very poor charts at this time.