So much does the pitcher go to the source, that in the end it ends up breaking. After countless attempts over the last few weeks and having made clear their inability to ward off downside risks by not being able to overcome their short-term resistances in this same period of time, the main stock exchanges in Europe gave way in the session of the Thursday the important levels of support they were facing.
The digestion of the minutes of the US Fed, the fear of a new wave of Covid-19 due to the Delta variant and the fear that the rebound in China’s economic growth could already be reaching its maximum point, acted as a Preamble of the catalyst that finally ended up having more impact on continental markets: the easing of the inflation target by the ECB.
The Ibex 35 fell by more than 2% during a good part of the session, with banks, hotel companies and Iberdrola registering the sharpest drops of the session. And following closely in his footsteps were the Italian MIB 30, the French CAC 40 and the EuroStoxx 50.
The situation, in fact, has accelerated the search for safe haven assets in recent hours. The ounce of gold has risen by 1.6% so far in July, after six consecutive sessions on the rise -except for timid losses yesterday of 0.3% -. With this movement, the gold metal recovers part of the declines accumulated in June and leaves the annual baggage with falls close to 5%.
The declines in the stock markets were so pronounced that they caused indices such as the Ibex 35 or the EuroStoxx 50 to pierce supports of 8,800 and 4,040 points respectively, which were the levels that had sustained the bearish bid in recent weeks. Its transfer warns that we are not facing a simple consolidation, but rather a full-blown correction, as the candle patterns seen in June already warned us, says Joan Cabrero, Ecotrader advisor.
The loss of levels opens the door to the beginning of a fall that could lead to a return to the lows that the EuroStoxx 50 marked in May at 3,855-3,785 points, the reach of which would be a magnificent opportunity to buy the stock again.
Towards the shopping area
In the case of the Ibex 35, the loss of supports implies that at least we will see a fall towards 8,500 points, “which would mean a correction identical to the one we saw in January, which took the Spanish selective from 8,440 to 7,713 points” , says Cabrero, who points out that seeing the downward trend that the EuroStoxx 50 still has, a fall towards the 8,250 whole of the Ibex 35 should not be ruled out.
The risk-return equation is therefore very positive for the Spanish stock market, as it has a potential rise of 17%, to 10,100 points, compared to a drop of between 1.7% and 4.6%. “If the Ibex 35 exceeds 8,900 points, the downside risk would be removed and it would be a clue that the index wants to go up again,” explains Cabrero. In the case of the European one, the equation is similar, it has an upward potential of 15%, up to 4,575 points and 3.5% down, up to 3,855 points.
Operationally, those investors who want to increase their positions in the stock market or the laggards who did not buy at the time, could take advantage of the reach of levels of 3,855-3,785 points of the EuroStoxx and the 8,250-8,500 points of the national selective.
Key levels within the Ibex
In this context, Joan Cabrero, Ecotrader advisor, analyzes the 35 securities of the main index of the Spanish stock market one by one, and issues his recommendation on each of them. The technical analysis expert offers his analysis in the short and medium term, according to the profile of a less or more aggressive investor, respectively.
Among the Spanish selective firms that have the most shareholders, Amadeus, CaixaBank, Repsol and Banco Santander are the closest to reaching their first levels, as they were yesterday less than 2% from their first benchmark levels. A decline towards these levels would mean leaving its price at levels in which the return / risk equation would be very attractive. In fact, for the bank and for the oil company, it would show a potential double-digit revaluation until reaching the first targets for growth.
For their part, it would be BBVA, Telefónica, and above all Iberdrola who would be the furthest from their purchase levels for now from the purchase levels among the firms with the most Ibex 35 shareholders.
“The latest falls have led the energy firm’s price to lose support that it presented in the short term in the area of 10.50 euros, something that is a clear sign of weakness that opens the door to a more than likely fall in seeks to test again the solidity of the key support of 9.70-9.80 euros, which is the clavicular or confirmation line of what could be a broad bearish turn pattern in the shape of a head and shoulders (HCH) ” , says Cabrero.
“On many occasions I have pointed out that Iberdrola is a security that should be in the portfolio but if it loses the 9.70-9.80 euros and confirms that pattern, the title could be directed to seek the objective of that pattern that would appear at 8 euros “.