Europe ETF at Crucial Level

by Jay Pestrichelli on June 6th, 2012

By now we’re all aware of the crisis in Europe and the impact it has had on global markets. But what we haven’t heard yet is how this compares to the issues of last summer.  The answer is simple; if there isn’t a turn around soon, there’s a good chance that it can get as bad as the lows of 2009.

Using Vanguard’s Europe’s ETF, VGK, as a proxy, the chart tells the story. The slight pop the last 3 days confirms some support at the current level. However if this fails here, expect another 11% decline. That is essentially the pain we’ve just experienced the last month.
Does anyone think Europe has really figured it out? Does anyone think that Europe has digested the problems of Greece, Spain, Portugal and the looming death punch that could be Italy?

The fear of last week’s record low interest rates would come back if there was another 11% decline and potentially at that point the US markets would change from a defensive posture to a full retreat.

So what does the Buy and Hedge investor do? The answer is on up days like today, consider tightening up hedges by rolling any protection that may be expiring this month vs. waiting till the end of expiration.


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