Europe (VGK) slides right as folks head on holiday

AMEX:VGK   Vanguard FTSEEuropean ETF
The Vanguard FTSE Europe ETF (VGK) was an early-year relative winner as foreign equities generally outperformed the US stock market. Then came the March pullback which brought about a risk-off environment and flight to the dollar - both factor hurting relative returns of VGK. Even with a notable retreat in the greenback and a gradual shift favoring cyclical and small caps in late May through July, VGK did not perform all that well on a relative basis to the SPX.

Nevertheless, the Financials, Industrials, and Health Care-heavy fund managed to claw its way toward 52-week highs by late last month. The first two trading sessions of August - a noted time when much of the continent's populous is on vacation - have featured a downside price action on high volume. Moreover, a bullish false breakdown in the dollar only adds to technical and intermarket headwinds for VGK here.

I see support in the $59 to $60 zone while $64 is obvious resistance. A bigger Q3 pullback, always wont to occur, could lead to a target toward the mid- 50S (that would be a material 14% correction).


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