The main stock indices are welcoming the latest changes in monetary policy with relief. And this allows benchmarks such as the Ibex 35 or the main Wall Street selective to remain in a bullish scenario. In fact, the the stock market is moving away from about 10% of the red line which opens a bearish scenario, from a technical point of view, although before that a new buying opportunity could open.
Although there are several global indices trading in the area of the highest levels of the year – the Ibex 35 and the S&P 500 have already reached it last week – technically speaking, the market picture does not yet allow us to launch the flying bells in complete freedom. The indexes which are in a exceptionally bullish situations are in the minority and they did not have the necessary company so that, technically, they could be fully sure that the market risks had been eliminated, according to Ecotrader advisor Joan Cabrero.
The Nasdaq 100 and the Russell 2000, or here in Spain the Ibex Medium Cap and the Ibex Small cap, have not been able to follow in the wake Ibex 35 and the S&P 500, and until they do, the picture will not be totally optimistic. Thus, in this environment, a further decline in the stock markets cannot be ruled out, which could jeopardize the highs of the year in which the main equity benchmarks are located.
“I consider it premature to rule out possible episodes of greater volatility that could cause new falls,” warns Joan Cabrero, who places particular emphasis on the solitude of the Spanish selection when it comes to reaching these milestones: “If we want to trust in sustainable growth, the The increase should not be exclusive to the Ibex 35” says the expert of the portal for investors of elEconomista.es.
As if he were a rescuer, the Ecotrader expert waves two different flags that determine a safe bath on the market. In the first case, the fluctuations in the shares could cause new falls, although not necessarily dangerous, to the area of the lows of September 6. At this point, Cabrero leaves the yellow mark in the area of 4,740 points in the case of EuroStoxx 50 and this would separate a consolidation from a correction. In the case of the Ibex 35, the yellow line It stands at 11,173 points, which would imply a decline of almost 5% from current levels. “This level would function as a stop “aggressive for open operations in recent weeks,” says the expert, who invites us to also look at the 18,200 points of the German Dax 40 as a reference for a possible bearish sign.
Yet Wall Street remains the market for directories and the first place to look for clues about the direction of global stocks. Just weeks before the US election, the S&P 500 index has suffered three sharp declines this year. And yet, the the index was successfully recovered on all these occasions until registering an increase of almost 20% so far in 2024. Thus, the S&P 500 is located 5.1% from its yellow line which cuts at 5,408 points and which would become a new buying zone as long as this reference is not crossed, which would increase the risk in variable income.
“The red line, which we must not lose under any circumstances if we want to maintain a bullish scenario in the coming months, continues to be at the August low,” explains Cabrero. For the selective Wall Street this level is at 5,186.3 points which are down more than 9%. For the Wall Street benchmark index, this level is at 5,186.3 points, a drop of more than 9%. This level is set during the last big scare for stocks that coincides with the latest interest rate increase by the Bank of Japan and the bad employment data in the United States that caused the stock market to collapse.
Still in the Spanish reference, the red line of the Ibex 35 is located at just over 11%, at 10,390 points. By the Spanish stock index there would be no noteworthy resistance until the peaks seen in 2015 and in 2010, they rose to 11,884 (an additional increase of 0.7%) and 12,240 points (3.7%) respectively.
The Ecotrader expert thus suggests waiting for a drop that brings the indices closer to these September lows (the yellow lines, see graphs) before taking a position. “However, I would feel much more confident in recommend buying after a drop if the Nasdaq 100 is first “The EuroStoxx 50 breaks above the 20,000 resistance level and the EuroStoxx 50 breaks above the 5,000 resistance level,” Cabrero points out, considering that a fall to the September lows would be less likely if it breaks above these resistance levels first.
