The stock markets of Europe and the United States faced this Friday the close of one of the most turbulent weeks in geostrategic and political matters, after the presidential elections in the North American country and the monetary policy meeting of the Reserve federal, which ended Thursday. with the reduction of interest rates other 25 basis pointsat the level of 4.50% to 4.75%, which already constitutes its second decline of this cycle.
And the consequences on the stock markets, although disparate according to geographical areas, were not long in coming. While in Europe, the benchmark indices confirm their decline below their first supports and now fear a return to the September lows, in the United States, North American small and mid-caps have caught up with the rest of the country’s major indices. and now the big four benchmarks – Nasdaq, Dow Jones, S&P 500 and Russell 2000 – are already trading above 2021 highs.
“Once this goal is achieved, it is a good time to collect partial profitsespecially in companies that have experienced vertical rises in recent weeks”, explains Joan Cabrero, technical analyst and market strategist, who assures that in his opinion, “the year could be considered practically over”.
It’s no wonder if you take that into account. The S&P 500 has reached all-time highs 13 times this year, and the Russell 2000 has done so on just as many occasions..
Exposure to the European stock market should also be reduced, but for different reasons. In this case this is due to the threat of a “broader consolidation phase” which would lead the stock markets to the September lows or even in the case of the Ibex 35 to a return to 10,900/11,000 points in the worst case.
The “accordion technique”
The idea with this reduction in exposure is none other than to obtain the necessary ammunition so that when it is time to increase it again, have enough cash to be able to afford “Christmas presents” what the market offers.
“As long as these September lows persist, a decline could be considered a simple scare that would move the indices 10% away from their last high, which would present an excellent medium-term buying opportunity with a good risk/reward equation more attractive than the current one”, explains Cabrero, who identifies the ten Spanish companies that would be technically more attractive if a decline in the market were confirmed.
“I recommend waiting for indices to approach the September lows before making further purchases, especially if key supports like the 11,560-11,600 points on the Ibex 35 or the 2,180 inside Russell 2000. In this case, an appropriate strategy would be to apply the accordion technique: slightly reduce exposure to the stock market to accumulate liquidity, which will allow them to take advantage of the buying opportunities that the market could offer in the coming weeks. come”, explains the expert, who alludes to the boom in Black Friday and Christmas which, in recent years, have facilitated the establishment of a Christmas rally in the markets, also called New Year or Santa Claus gathering.
We must not forget that 20 of the last 30 years, the month of December has been bullish on the Ibex 35. An even higher figure if we talk about the S&P 500, where the number of occasions where the last month of the year is for the bullfight.
Now, if the indices were to lose the August lows – where the red line is located according to which the stock markets must not give in under any circumstances – then we would be talking about something more serious, the moment to retreat towards winter quarters, assuming that we face a more complicated scenario.
Whether or not these levels are reached will largely depend on how the market reacts in the coming weeks to the election of Donald Trump as President of the United States. “Even though it is often said that the impact of political events on markets is temporary, it would be unrealistic to apply this idea to the current situation, because the results of these elections have significant weight, especially for the economy American and its international market relations”, warns Hans-Jörg Naumer of Allianz Global Investors.
The entity assures that information on issues related to economic policy in certain parts of the world is increasingly uncertain. At least that’s what the Economic Policy Uncertainty Index (EPU) suggests. This indicator reflects media coverage of economic and political issues that generate uncertainty and is currently at a neutral level in the United States. However, global reports, particularly in Europe, tend to highlight economic risks, with a particular focus on Germany.
In this sense, the collapse of the electoral coalition in Germany after Olaf Scholz dismissed his liberal finance minister Christian Lindner and led the country to a possible electoral lead in the first quarter of 2025, as well as the weakness of the economic crisis. that the German locomotive crosses has once again placed emphasis on the health of German production.
“GDP is expected to remain stable throughout the year, as predicted by the International Monetary Fund (IMF) in its latest projection, after a decline of 0.3% in 2023. This highlights the structural weaknesses of the German economy”, such as the energy sector. costs, growing competition from China and labor shortages,” market sources predict, highlighting the slowdown in the German manufacturing industry.
“Germany needs a stable and reform-oriented government to react to the impact of possible political changes by the new president-elect of the United States, Donald Trump, which will affect Germany’s trade, tax and defense policies” says Eiko Sievert, public sector and sovereign debt analyst at Scope Ratings. “Some of the negative implications of a second Trump presidency will likely occur when his term begins in January 2025. The government’s inability to respond quickly “These measures could worsen its persistent structural vulnerabilities,” he adds.
Iberdrola
If it forms a decline similar to the one we saw in January and February, which took Iberdrola from 11.7 to 10.1 euros, I would be in favor of buying with your eyes closed to follow its uptrend. This would happen in 12.3-12.5.
BBVA
BBVA’s clearest buying window would open if it breaks resistance at 9.67 euros, but if the Ibex 35 hits 10,900/11,130 points, it’s likely they can buy around 8:50 a.m.. I doubt I’ll lose 8:20 a.m..
Enagas
The Enagás price curve has been moving sideways for a decade between the support zone of 11.50-12 euros and the resistance of 17 euros. If we are lucky enough that it falls to the base on this side, buy without hesitation.
Interbank
Bankinter presents two very interesting commercial areas. A closer, like 7:20-7:30 a.m.which would fit with an Ibex at 10,900/11,130, and another further away at 6.65which would be 10,300 with an ibex.
Bank of Santander
The idea with Santander is to buy as soon as the Ibex 35 reaches the support zone of 10,900/11,130 points, looking for an increase that will lead the bank to attack its historical resistance zone of 5 euros.
Railway
Ferrovial has already reached the zone that would have a priori recommended buying weeks ago at 35.50 euros. Given the possibility that the Ibex 35 continues to sell off positions, I would wait to buy the 34 euros.
Repsol
The extent of the area 11-11.20 euros this would mean a 38.2% Fibonacci correction of the entire previous rise that took Repsol from 4 to 10. €15.70yes, it is also the base of the chain. He buys in search of 16.
Inditex
Inditex’s loss of 52 euros confirmed a small bearish reversal which suggests the possibility that it could seek support at 50 euros before resuming increases. In the 50 euros I would be in favor of purchasing.
Sacyr
The key support, which Sacyr cannot lose if it wants to continue to maintain its upward trend in the medium term, is located in the 2.80-2.87 euros. If Sacyr price falls to this support, you can buy with a stop at 2.80.
Cie Automobile
In the case of CIE Automotive, the critical support it must not lose to continue its upward trend lies in the 22.90-23 euros. If the current decline seeks support at this support, you can buy with a stop at 22.90 euros.
