Growing concerns about global growth, given the low oil price – stabilised below $70 – and falling Treasury yields remain the main threats to the gains in European and US stock markets.
And the fact is that the exhaustion of buyers on the Old Continent continues to be evident. If last week the European stock exchanges failed to increase the number of consecutive sessions in which they closed above the minimum of the previous one, this trend continues this week with the Ibex demonstrating, for the fourth consecutive day, its inability to fill the gap that opened downwards since the 11,280 points.
This behavior shows that “the rebound of the Ibex 35 is vulnerable and that the Spanish index is having a lot of trouble containing the selling pressure,” explains Joan Cabrero, technical analyst and strategist at eco-retailer.
“Everything indicates that in the short term the index has peaked at 11,436 points and from this environment could have started a phase of correction of the previous rise, whose first important support is located in the 11,000 points“.
Lose the 11,000 points The information that the market would give is that the consolidation could be broader and deeper, potentially targeting the 10,690-10,740 pointslevels at the key and critical support level of 5,000/5,100 points of the S&P 500.
The 4,670-4,650 points of the EuroStoxx 50
“In Europe, the decline could become more pronounced at least towards the 4,670-4,650 points“, explains Cabrero. “Between this range, it would mean an adjustment of 61.80/66% of the last bounce and the 4,585 pointswhere the base of the channel that has guided the rises of recent months is located and is the Fibonacci adjustment at 78.60% of the last rebound, I am in favor of buying the European stock market again as long as it is assumed that in the worst case (in a bullish context that I will defend as long as the S&P 500 does not lose 5,000 whole) the EuroStoxx 50 could head towards the search for the zone of 4,400 points“.
