Despite the fact that the selective index of Spanish equities, the Ibex 35, is still above the important support it has in the 9.000 points there are several notices about what could happen next year. And in this sense, the news is not very encouraging for the interests of small and medium investors. If there is a time when special caution should be exercised with trading on the stock market, that is the current one. Where any calculation or error in the open movements can cost us many euros, as has happened in other historical moments.
It is not just the presence of a new economic recession. If not also other variables or data that may be indicating that the best we can do at this time is to get out of the equity markets, both national and outside our borders. Because we are very afraid that when this downtrend occurs, the stock market may have a long downward journey. Much more than most retail investors might think. With the real risk that the Ibex 35 could go to levels of 7.000 points or even lower.
So that no one is caught by surprise we are going to expose some of the signals that are being handled in the financial markets. While on the other hand, there is no doubt the equity markets are offering many weaknesses these days. Furthermore, it cannot be forgotten that the Spanish stock market has been growing for many years. Virtually without exception since 2013 and with hardly any breaks in the conformation of their prices. Although its maximums have not gone beyond 10.000 points and very far from the already historic 13.000 points. Where savings have been profitable more effectively than in other financial or banking products.
Spanish stock market: GDP reduction
The first notice has been given these days by the Bank of Spain since it revealed that the Gross Domestic Product (GDP) will rebound by 2% in 2019, a figure that contrasts with the 2,4% that the BdE itself indicated in June. This in practice means that in a very short space of time it has been lowered its estimate by four tenths. This is a very significant revision and it indicates the importance of this data. Although at the moment it has not had an impact on the equity markets. Another very different thing is what may happen in a few weeks or a few months.
Of course the discount dGross Domestic Product (GDP) is not good news for the interests of small and medium investors. Since sooner or later it will be reflected on the data of the listed companies themselves. With a foreseeable fall in their profits and that will entail a significant adjustment in the configuration of prices. In this case, downwards, although it is not known under what intensity in these movements. Within this general context, it is necessary to emphasize that GDP is a thermometer to find out what will be the evolution in the equity markets.
Delinquency rebounds strongly
Perhaps this is one of the most reliable parameters to determine if the stock market is going to go down or not in the coming months. Among other reasons, because it indicates the state of a country's economy. Well, these days it is being known that the delinquency of Spanish clients is increasing and this is a sign that the economic recession it could be stronger than expected by financial analysts. Not surprisingly, this important piece of information was the one that warned about what was actually going to happen in 2008. Because it simply means that clients have certain problems in paying off their debt with credit institutions.
While on the other hand, it is a sign that things are not going well between society, from an economic point of view. This is a clear sign that the economy will get worse in the coming months and this is what it is telling us in recent weeks. Also anticipating a drop in the profits of companies listed in equities. Through a figure that has been growing little by little since the previous year. With an enormous repercussion in the financial markets, as it is logical to understand with its interpretation.
Profits slow
It is another warning to sailors about what can happen from now on. Because it perfectly analyzes the real state of publicly traded companies. To the extent that it can take effect on business accounts for the next quarters and adjust the price with which they are quoted at the moment. It is a new reality that small and medium investors will undoubtedly have to assume from now on. It is not unusual for them to undo their positions due to the loss of value of the shares of these companies. Nothing will be with in recent years.
While on the other hand, you cannot forget that the economic slowdown is causing the profits of companies in the Spanish continuous market to decrease little by little and since the end of last year. In what constitutes a reality that cannot go unnoticed by a good part of small and medium investors. Because in effect, it may be that next year its price will be more adjusted. In other words, good news for investors who are currently fully liquid. And bad of course if you are invested for when this moment arrives that can be started.
Corrections to excesses
Of course, the excesses of Spanish equities will have to be corrected sooner rather than later and it seems that we are before the prolegomena of this new scenario in our relations with the always complicated world of money. Since 2013 the Spanish stock market has not stopped climbing, except for rare exceptions such as the one generated in the previous year. This fact can cause the falls in the stock market to be more intense than usual in these cases. Because in effect, this can be a reaction phase to the latest rises generated in the equity markets, both nationally and outside our borders.
On the other hand, you cannot forget that nothing goes up forever, much less in the stock market. Almost eight years of increases is an exceptional period for investors and one that has not seen each other for a long time. In other words, it would not be a drama if the Spanish stock market lost 10% or 20% of its current valuation. It would be considered more than anything a punctual correction to the previous excesses and in this sense you must understand these movements in the equity markets. Another very different thing is that the Ibex 35 could go further than the 7.000 point levels and that in this case it would be interpreted as something much more serious.
Increase in volatility
Another of the common denominators of this scenario in the stock market is that there is more volatility in the configuration of prices. With divergences that may be more important between the maximum and minimum prices. With differences that can perfectly exceed 3% levels and even with even higher percentages. Although they are very useful for trading operations or on the same day. Where it is essential to adjust the purchase and sale prices very well, above other series of technical considerations. In any case, it is much more complex to direct operations in the medium and long term because the risks are significantly higher than in the longer terms.
Another aspect that must be taken into account from now on is that which has to do with the amounts of transactions carried out on the stock market. They must be much more moderate than up to now. Especially given the obvious risk of being caught in a scenario that is very unfavorable for the interests of small and medium-sized investors. It is necessary to anticipate the expenses that will be incurred in the coming months or years. For example, tax obligations, unamortized lines of credit or payment of household bills (electricity, water, gas, etc.). Not surprisingly, you may have some other negative surprises in this period of time.
While finally, it is also necessary to value that it is very important to opt for liquid values that allow you to enter and exit positions on the stock market at the time you want. In this sense, almost all the members of the Ibex 35 offer you this possibility as they are very high capitalization securities. They move many titles every day and at levels that must be classified as optimal for a large part of investors.