Trading at current prices, it is the norm for small and medium investors to wonder if this is not the time to enter the equity markets. The collapse of the main stock indices has become a reality in the last days of the year and the selling pressure has been imposed with crystal clearness and up to one unseen levels in recent years. Both with regard to national financial markets and those outside our borders.
Of course, this was not the scenario foreseen by a large part of the financial analysts who estimated that the stock market was going to end up with a significant buying force. In the end it could not be this way and the pessimism has definitely established itself among small and medium investors who are reducing their exposure to equities in a way that they have not done for many and many years. But at the end of the day, this moment so feared by retail investors has arrived.
All of this is compounded by the fact that this stock market crash is accompanied by a significant volume of contracts. In other words, there are many investors who are undoing their positions in the stock market. In this way, Spanish equities will close this year in one of the lower levels of the last exercises. Although the worst of all is that the uptrend has been completely broken at the end. A bad precedent to take positions from these precise moments.
Collapse and back to 7.500 points
One of the most relevant events in the selective index of Spanish equities, the Ibex 35, is that it has not managed to maintain its positions of laterality in which it moved during this bad year for the financial markets. At levels of 8.800 points and that I have led him to be testing the last benchmark support that he has left in these days and that is at 8.500 points and that it will be very difficult to endure due to the pressure of sales by investors.
If this level is also demolished, it no longer has more supports up to 7.500 points, which is the quote point that coincides with the Brexit just two years ago. In practice, this means that equities would still have an 11% downward trajectory from current trading levels, which is saying a lot from the point of view of losses. Not surprisingly, there is a lot you can lose from now on and very little to gain.
Change of trend in the stock market
In any case, there is an unanswerable fact and that is that the equity markets have gone from a clear laterality scenario to a downtrend one. Without seeing at what levels a consistent floor can be formed and that serves as a point of reference to reopen positions in any of the international squares. In any case, the great doubt from now on is how long this will last. downtrend, although more and more financial analysts estimate that it can remain for more years than desired in these corrective processes.
One of the strongest signals about the emergence of this trend is coming from the markets of United States, after a long upward run since the years after the economic crisis between 2007 and 2008. Where the revaluation has been of margins higher than 100%. From this point of view, it is logical that these corrections take place since, as small and medium investors often say, nothing is eternal in the stock market. Where it does not rise or fall eternally as can be shown in the equity markets in recent years.
Announcement of an economic recession
In any case, these movements in the equity markets can also be understood as an advance of a next crisis in the international economy. In this sense, you cannot forget that financial markets usually discount the closest scenarios. On the other hand, this is a fact that is being contemplated by a good part of the economic reports by the different financial agents that confirm a stop in world growth. Do not forget to take some other strategy in the investment sector.
On the other hand, all the economic data affects this and what the stock markets around the world are doing is picking up on this new and worrying scenario. Where undoubtedly the best will also appear business opportunities, among other reasons because share prices will be very competitive. With a potential for revaluation that will be much higher than until now. Therefore, you also have to see the positive aspects of this situation that all small and medium investors fear.
Displacement of monetary flows
Another aspect to take into account from now on is that a good part of the investors' capital is being transferred to other financial assets of particular relevance. As for example, derivatives of banking products, such as short-term deposits, bank promissory notes or high-paying accounts. They have seen how in recent days they have seen their profitability grow as a result of monetary policies by the most representative governments in the world.
In another vein, it should be noted that investors have stepped on the brake in taking positions in these equity markets. At least until there is a definitive definition of what can happen in the stock market in the next few years. This fact is leading to sales are catching on with great clarity about purchases. Something that is penalizing equity markets with particular intensity. Beyond other technical considerations and maybe even from the point of view of its fundamentals.
Strategies to develop
In all cases, you will have no choice but to import a series of behavioral guidelines in order to protect your financial contributions against adverse movements in the equity markets. And that would be limited to developing the following tips that we are going to expose you below:
- No expose yourself to operations which are not necessary at this time. Not surprisingly, it will be much more profitable to wait over other investment strategies.
- You analyze that from now on there is more you have to lose than to gain. For this reason, it is not convenient for you to rush into the occasional stock exchange operation.
- Be in complete liquidity It is a good opportunity for you to attend to other alternative investments in which you can make the savings profitable from these precise moments.
- In any case, if you are going to opt for investment in the stock market that is always under monetary contributions of small amount. It will be the best strategy to defend your interests as a small and medium investor.
- It may be an investment moment that is really interesting, but as long as the period of permanence is at medium and long. Never in the short term where you have all the ballots to get hurt.
Bad business results
Another aspect that has led this company to be listed at its current levels is the weak business results it has presented in recent quarters. With a very significant increase in your debt you are questioning the viability of your line of business. With a very clear imposition of sales on purchases, with a intensity rarely seen in the preceding exercises. And in this way it does not go up, far from it. This is a factor that you should analyze with great consideration to meditate whether or not it is worth risking your money in a stock trade.
On the other hand, you will have no choice but to be very attentive from next year on the business results that are published in each quarter. They will give you more than one signal about what you have to do on each occasion and thus make your positions profitable above other technical considerations. In this sense, the best advice is to flee from those listed companies that present significant debts. As well as having a better selection of the securities that will make up your next investment portfolio based on these relevant criteria.
In any case, keep in mind that you have some very complex years for investing in the stock market and therefore you will have to import some exceptional measures. Not surprisingly, the stakes are high in the coming months. Despite the fact that some very specific rebounds may confuse you in the strategy you are going to use in the next few days. You are risking a lot as are your usual savings.