Objective achieved! THE hangover extremely bullish post-election campaign that the main Wall Street stock exchanges carried out this Wednesday – the bullfight they showed themselves euphoric in the majority of selective American indices and allowed the S&P 500 to record its most bullish post-election day in its history – helped North American small and mid-caps catch up with the rest of the major American indices.
The Russell 2000, the selective index which brings together this type of company across the Atlantic, managed to rise by one 7.8% and climb to the maximum zone of 2021, which the rest of the main indices of the country had already reached in recent months. He late student from class, he did his homework and joins the Nasdaq, Dow Jones and S&P 500, reflecting the North American market poker aces.
“US stocks rose on the prospect of pro-growth Republican policies,” many market analysts agreed after Wednesday’s trading session. Now the key to the market is how long the upward movement can last and, above all, whether it has the consistency to be able to decisively beat – like a monthly close – these 2021 highs.
“Once this objective is achieved, it does not seem bad to me that they choose to reduce their exposure to the stock market a little”underlines in this sense Joan Cabrero, technical analyst and strategist of eco-retailer. “If the rise continues, they will be happy to continue holding, say, 75% of their positions, while if the market corrects, they will have interesting ammunition to look to buy. Christmas gifts”, explain.
And from the portal prime of elEconomista.es The latest rise in the Russell 2000 was identified as “wonderful news for the coming months, which would continue to invite people to take advantage of index declines of 10% from their previous high to buy.”
Furthermore, we must not forget that the election of Trump, even if it has given hope to the market in the short term, could have negative effects on investors. bullfight in the medium and long term since, as La Financière de l’Échiquier (LFDE) points out, “the consequences of its policy – if it is applied as it announced, which is not certain – include unfavorable aspects for the stock market in a few points”.
Operationally, the September minimums continue to be maintained while yellow line which should be watched below in most global indices. “As long as these September lows hold, a decline could be considered a simple scare “this would move the indices 10% away from their last peak, which would present an excellent medium-term buying opportunity with a much more attractive return/risk equation than the current one”, explains Cabrero, who in this case invites you to look for real Christmas giftswhich I will help you identify.
The dilemma in Europe
The operational strategy also calls for reducing stock market exposure in Europe, but for different reasons. On the stock exchanges of the Old Continent, the first support levels to watch have been lost in recent days. In fact, the draw The manifesto of bullish and bearish forces present in the Ibex 35 over the last 28 sessions was shattered yesterday. The Spanish selective distanced itself from the trend of the rest of its continental counterparts and this Wednesday pierced the support that represented the lower part of the lateral movement in which the index was immersed in recent weeks.
“This is anything but bullish and it warns us that the bears have taken control of the short-term situation of the Spanish stock market,” warns Cabrero while asserting that “the threat now is that we could see more consolidation which could appear. because in the worst case, 10,900/11,000 points“Whether or not these levels will be achieved will depend largely on intermediate support from the 11,138 pointswhich are the September lows, and which now constitute one of the levels which can help stop a possible fall.
The EuroStoxx 50, which has already lost the support it presented during the 4,900/4,870 pointsis also open to a broader consolidation phase. In its case, the consolidation phase threatens to bring the continental selective also to the minimum zone of September in the 4,730 points or, in the worst case, the 4,675/4,700 points.
“I recommend waiting until indices approach September lows before making further purchases, especially after key supports are lost. 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 buying opportunities that the market may offer in the coming weeks. »
Of course, it is the depressions of the month of August that we really have to watch out for since that is where the red line is located, the perforation of which would imply something more serious, the moment to retire to the “districts of ‘winter’, assuming we are facing a scenario of ‘death’ and not just ‘fright’.
