Trading in a Europe-Driven Market

Our market bounced going into the close of the European markets, but that reflex move looks like it is losing its strength. It is little comfort to the small investor or trader that large hedge-fund managers are having their own problems getting on the right side of risk-on or risk-off trade. The fundamental perspective and the technical take have been victimized by the erratic action of a market that's tethered to the erratic action in the euro zone. In this macro context, during this period of instability, it is necessary to identify the broader long trade and the trade to absolutely avoid.

The trade to run from or short, in my opinion, is the euro dollar. A weekly chart of the Currency Shares Euro Trust (FXE) shows the ETF making a series of lower highs under a long-term downtrend line. In August of this year, price broke below a four-month consolidation support line and under the uptrend line drawn off the July 2009 low. Similar patterns were played out at highs in 2008 and 2009. Two weeks ago, the uptrend line and the 200-day moving average were retested, but that move failed, and the next level of support is a secondary support line, and the October low, in the $132.50 area....295 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.