Greg Guenthner

Our friends in Europe love a good party.

But who can blame them? Especially since they just endured a rotten couple years filled with near-meltdown conditions.

I’ve stumbled onto countless concerns about the speed with which domestic markets lifted off to start the year. But if you think the S&P climbed too quickly — check out Italy and Spain. After posting modest gains during the first week of the new year, both these markets exploded to the upside, quickly outpacing the S&P.

But as you can see, both Italian and Spanish shares are rolling over a bit. It looks like that Jan. 1 hangover showed up a little late this year…

Spain and Italy iShares vs. S&P 500 SPDR

Both pullbacks are abrupt — but completely necessary. Using the Italy iShares as a proxy, I’m seeing a retreat from the highest overbought levels since 2009. Ditto for Spain.

But before you put on your bear suit, I offer a quick word of warning:

Despite these sharp pullbacks, Italy and Spain have some very nice-looking charts. Big volume. Clear bottoms forming. They could end up having a fantastic year.

Right now, we’ll have to see when and where buyers step in and stop the bleeding. If the consolidation becomes more orderly, you could be looking at a couple of solid buying opportunities.

Greg Guenthner
for The Daily Reckoning

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

Recent Articles

Addison Wiggin
A Manifesto, of Sorts

Addison Wiggin

More than a decade ago, Addison Wiggin helped co-found the Daily Reckoning with Bill Bonner. Today, he recalls this life-changing experience, and explains how - despite being rooted in the world of finance - it is and will always be about much more than money. Read on...


4 DIY Halloween Costumes You Can Make in 10 Minutes or Less

Peter Coyne

Halloween is tonight! And just in case you waited until the last second to think about what you're going to wear, here are four costume ideas you can easily put together in about 10 minutes or less. With these costumes you'll be the hit of your friend's party - provided you're friends with a bunch of economists. (Downloadable masks included...) Happy Halloween!


Bill Bonner
4 Basic Truths to Help You Navigate the Financial News

Bill Bonner

The financial news is full of misinformation - reported by unreliable pundits and taken at face value by an easily swayed public that doesn't really no better. That's why today, Bill Bonner relays the four basic truths he's discovered during his 30 year career in the financial industry to help you make sense of it all. Read on...


Extra!
How YOU Can Help Pass the Swiss Gold Referendum

Grant Williams

For those who doubt the effectiveness of the Swiss Gold Initiative, Grant Williams has a few startling charts to show you. Today, he relays just how popular this movement is, and how you can actually influence the outcome... no matter where in the world you call home. Read on...


How Small Cap Stocks Saved the Market

Greg Guenthner

For most of the year, no one wanted small cap stocks in their portfolios. But over the last three weeks, few sectors of the market have performed better than small caps. Greg Guenthner explains how to use this to your advantage... and what to expect for the rest of 2014. Read on...