Is France the Next Greece?
A look at the ETF and possible entry points.
France is a mess like the rest of Europe. More importantly, it's like Greece in that the French have "privileges" around their jobs, such as 35-hour workweeks with early retirements and massive entitlement issues.
I've often said that the Greeks modeled their government after the French, so the riots we saw in Athens are likely to be met, if not exceeded, by the French when austerity measures get announced there.
The iShares MSCI France Index (EWQ) is trading $22.50ish right now, which is no-man's-land according to the chart. So, I have two entry levels I'm watching: $23.50 on the upside and on a close below $22 on the downside. I'm setting stops at the $25 area.
Looking at the chart below, $24.50 is the better upside resistance, but I want the exposure, hence the slightly lower entry price. Plus, I'm expecting to leg into this trade, not jump in with both feet. I'm also looking out below at $22 in case the ETF moves away from me in the short term. A small move higher will get us into the short as the CAC 40 Index approaches strong resistance around 3800 (currently 3734ish) and a break above 3800+ will have us out at $25. If Europe is as bad as I think, $17.50 looks like a good downside target.
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