Note the classic double-top, or M-top,that formed earlier this year. Price came up for a matching high in April and May, and the television pundits told investors to go long because Italy is about to break out higher. Wrongo. Price collapses. All anyone had to do is look at the chart and you would know right away to ditch Italian longs and go short. Those that did not pay attention to charts lost their shirts.
The Italy versus EU budget battle is sinking stocks in the boot-shaped nation. Last week, both sides began kissing and making up, so the political twits will likely agree on a budget in the days and few weeks ahead. The green lines show positive divergence across all indicators. Same on weekly chart. Price is below the moving averages requiring a mean reversion higher. However, the flush lower late last week has momentum that may need to dissipate over a couple-few days. The holiday trading period also creates more uncertainty. Nonetheless, the chart is set up nicely for the bulls. If you are Italian or like spaghetti, you may consider a long here going forward. Keystone currently has no position in EWI. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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