Spanish stocks continue to grind sideways over the week, and it was shown to be similar in the futures market as we continued to bounce around the 7800 level. This market looks like it’s trying to decide which direction to go, as it has pretty significant support at the 7600 level, which of course would be a nice sell signal for to break below it. Alternately, the 8200 level looks pretty resistive as well, and a move above that level would of course have more and more people stepping in to buy the market. However, it should be noted that Spain is the epicenter of all things euro as far as its troubles are concerned, and as such money will typically avoid places like this. As an end result, it looks as if waiting for a move outside of the “box” might be the thing to do.
The IBEX had a positive session on Friday, and even managed to test the top of the Thursday shooting star for resistance. This area was centered on the €7900 level, and as a result it was a “big round number.” Because of this, it would’ve made an easy target for the sellers. However, it does appear that we are forming some type of base at this point time and that the markets at lease look like they want to do somewhat well in Spain.
Currently, we see this market as being in consolidation between €7600, and the €8200 level. We do see the upward bias, and as such would buy this market in the futures market based upon short-term pullbacks that show signs of support. Alternately, there is the chance of a breakdown. After all, Spain is the epicenter of all things that are bothering the European Union right now, and as such a headline could forces market much lower.
The IBEX rose during the session on Thursday as Spanish stocks continue to grind higher in a very sluggish move. Spanish stocks will continue to be a bit heavy as Spain of course is the epicenter of all problems Europe right now, and because of this, we are not overly fond of this market.
Part of the bullishness that we saw worldwide could have been due to the fact that it was the first day of the month, and as such a lot of money managers would have been putting their money to work in new stocks. However, we think that the Spanish market maybe kind of quiet today as the US jobs number is due out 8:30 AM New York time. With that being said, we are going to remain flat of this market as we think there are better indices to be involved with right now.
The IBEX rose during the session on Wednesday as he markets continue to fight a bit of work between €7800 and €7600. Currently, it is index is going sideways after having a fairly nice rally during the summer. However, we are currently waiting to see if the Spanish government asks for a bailout. The longer that the government takes, the less risk appetite in the general there will be. Of course this will have a negative effect on the IBEX, and because of this we are very neutral about Spanish stocks at the moment. We believe that the consolidation between the 7600 and 8200 levels will continue.
The IBEX had a slightly positive session during Tuesday, as the €7600 level continues offer support. However, we are pressing up against the very top of the Friday shooting star, and as such we are not ready to go long quite yet. If we can manage to get above the €7850 level, we are willing to start going long in the futures market.
The Spanish markets of course are going to be very interesting and very sensitive to the debt crisis. This is because Spain of course is the epicenter of everything European debt concerned, and as such headlines will have to be taken into account as you trade this futures market. Nonetheless, the technicals do look like we’re trying to find a little bit of footing here and return to the top of the recent consolidation.
The IBEX 35 had a fairly quiet session during the Monday trading hours as the futures held onto the €7700 level. This area has been support in the past, and looks to be support now. With that in mind, it does appear that we are heading higher, and we would be buyers if we can break above the highs from the Friday shooting star. This would have is aiming for the €8200 level, as we think this market is essentially range bound at the moment.
As far as selling is concerned, we would need to see the €7600 level collapse under the weight of the sellers. Until this happens, we simply see no reason to do so and believe that the path forward is still going to be consolidation.
Spanish stocks had a very quiet week as we currently wait to find out whether or not the Spaniards are going to ask for the needed bailout. Right now, it appears that the market is comfortable sitting just below the 8000 level, as we have started to consolidate in a 400 point range. On the bottom, we have 7600 which could be massive support, but we need some type of positive catalyst to get the market going forward.
Looking at this weekly chart, it appears that the range is so tight that is going to be almost impossible to take a long-term position. We need to see the Spanish government ask for the bailout in order to start getting bullish the Spanish stocks again. If they keep dragging their heels when it comes to this, there is a strong chance that we break the 7600 level.
If we break 7600, there is a good chance that we fall to 7000 in relatively short order. In fact, we would be very aggressively short the Ibex via the futures markets if this happens. This will more than likely be predicated upon the markets finally getting sick of waiting on the Spanish to do what is obviously needed. At this point time, it appears that we are basically waiting on pride to be swallowed, so that the world can move on.
Below 7000 we have an area all the way to the 6000 level that could offer support. However, it appears that getting below 7000 will more than likely open up the door down to that very 6000 level. This in mind, it’s hard to imagine that the markets would be doing well anywhere in Europe, and as such we may find ourselves short of several different indices at the same time.
We need to see a breakout of this range between 7600 to 8200 in order to place a longer-term trade, but more than likely it will be an obvious reaction to headlines out of the European Union. More than likely, if it’s negative headlines this market will absolutely come undone.
The IBEX rose slightly during the session on Friday in order to substantiate the 7700 level as a minor support zone. Currently, we see the 7600 level as being much more substantial, and as such we think that we could bump along the bottom here for the short-term. We deftly think that for the next couple of days we probably have more support than resistance, so buying is a possibility. However, Spain is the epicenter of all things bad in Europe, and as such this is one of her least favorite markets to play until we get some type of decisions about the debt issues.
The IBEX fell during most of the session on Thursday in order to test the €7600 level for support. There was a nice bounce at that point time, and by the end of the day we had formed a nice-looking hammer. If the market gets above the €7800 level, I believe that the market will race back towards the €8200 level. This is a nice consolidation zone, and the fact that we formed a hammer just above the €7600 level suggests to us that this is simple consolidation after a nice move higher. Looking forward, we would prefer to buy this market as opposed to sell it, but if we get below the €7600 level we would be forced to be short of this market as it is the epicenter so many problems.
Spanish stocks fell during the session on Wednesday, in the futures fell in turn. Looking at this chart, there is an obvious uptrend line that we have seen over the last couple of months that is currently being tested. With even more ominous about this chart is the fact that it does look like a head and shoulders pattern has now formed.
The one bright spot of course is the fact that the daily lows did respect the neckline, and did not break below in order to trigger the selloff. However, it does look like this will more than likely happen given enough time. After all, the most recent high is lower than the one before it, and this of course is always the first sign of a trend starting to die off.
Looking at the €7600 level, it is obvious to us that the support level simply must hold for this market to continue higher. If it gives way to the sellers, this market could fall rather rapidly, and we suspect it would it initially target €7200, and probably €7000 before was all said and done. This would be at least the first leg lower, as the fear settles back into the marketplace.
We cannot think of a place that is more the epicenter of trouble right now than Spain, so it would make sense that this market would be rocked by bad news. The Spanish have not asked for a bailout yet, and the world is simply waiting to find out when they will. If they do, there is a good chance a lot of Spanish companies will do quite well, as a lot of them are invested in Spanish sovereign debt. This is especially true in the financial sector, and as such we would expect Spanish banks to rally quite vigorously if that bailout is applied for.
However, right now looking at the charts we see nothing but weakness ahead, and will sell aggressively below the €7600 level. As for going long of the Spanish market, we are very reluctant to do so under the best of conditions. However, if we get above the €8200 level, we would have to admit that this strong move would have to get us going long.
The Spanish index fell precipitously during the session on Tuesday, in this makes sense to us as there has been no “grand bargain” for Spain over the last week although the markets had anticipated. The bailout has not been requested, and as such we should start to see various sectors in Spain suffer as a result. This would be especially true of the financials as they hold so much Spanish debt.
For us, the €7600 level looks to be support and should hold the market up. However, if it does not we believe the €7200 level is almost an afterthought at that point. Because of this, we are paying attention to €7600 as a significant level for which to place a trade. However, we need to wait to see what the reaction is in order to decide which direction to go.
The IBEX futures market fell significantly during the session on Monday as the 8000 level is no longer supportive. However, we are towards the top of a greater consolidation area, and as such we think that the market will continue lower. We also believe that the €7600 level should continue to be support, and as such are looking to sell at this point, and then by once we find support closer to that level.
Ultimately, we think that this market continues higher as it looks so bullish overall. However, the €8200 level needs to give way in order for the buyers to take control. Until then, we can only play it as a range bound market area.
The IBEX had a fairly positive week, but gave back much of the gains on Friday in order to form a relatively weak looking candle, but not necessarily terminal. This looks like a market that is trying to break through the support level at 7600, but can’t quite find the strength. Alternately, there is quite a bit of resistance at 8200, and we see this is an area that the market will have to break out of in order to become bullish again.
In the meantime we see simple consolidation, and the range been the two levels mentioned above. With this in mind, it is very difficult to place a long-term trade in this marketplace, but it must be noted that the overall trend is decidedly down.
Spanish stocks were hit especially hard on Friday after the lackluster performance by European Union politicians in order to get some type of solution to the debt crisis. The Spanish prime minister suggested that they weren’t quite ready to ask for a bailout yet, and this of course will hurt Spanish banks. The main reason of course is the fact that Spanish banks hold so much Spanish debt. With this in mind, they will way down this index over time, and we are going to avoid it until some type of solution is put together.
Currently we see the 7600 level as massive support. If that level gives taken out to the downside, this market could fall much farther. We don’t necessarily think that will happen however, but a nice range looks to be forming between the 7600 and 8200 levels.
The IBEX had a positive showing for the Thursday session, but currently languish is just below the 8200 level, which has served as significant resistance a couple of different times. Because of this, we aren’t as favorable on this particular index as we are some of the others in Europe. In fact, we would avoid Spain in general as there is far too much focus on it right now with all things debt related.
Because of this, we think that there are selected names in Spain that you can enjoy trading, but in reality most of them that aren’t financial will probably just get whipped around. We do like the Spanish banks however, because the bailout that is almost certainly, in the near-term will recapitalize them in a lot of ways. This being said though, Spain is one of her least favorite markets.
Spanish stocks do quite well during the session on Wednesday as the world continues to think that the Spanish government is getting close to asking for a bailout. Because of this, financials will do especially well in the IBEX as they are by far one of the largest purchasers of the Spanish that.
Looking at the charts, we can see that the €8200 level is an area that should become resistive, but since we finished the session on Wednesday at the very top of the range, we do believe that it will give way. On pullbacks, we would be interested in buying Spanish banks, as well as a breakout above the aforementioned 8200 level. As for selling, we simply would not do it right now unless there was some type of announcement that Spain was absolutely positively not going to ask for a bailout.
The IBEX had a strong session on Tuesday as the 7600 level offered plenty of support as well as a bounce for this index. Spanish stocks in general did quite well, and if the rumors about Spain asking for a bailout are indeed true, we believe the Spanish banks will do quite well as they are by far the most exposed to Spanish sovereign debt. This will be a bit of a reprieve for these institutions as they are on the whole for massive losses. Because of this, we think that this will be a very headline grabbing index, and as such we are very cautious yet optimistic. On a move above 8000, we believe this market goes much higher.