The national equity index, the Ibex 35, closed last week with a rise of 0,50%, which has led to its prices being at already very high levels. close to 9.400 points. The Spanish selective closes four consecutive weeks on the rise and almost at the highest since July of last year. This is the best of data in the equity markets since last summer. This fact has encouraged many small and medium investors to reposition themselves with the aim of making their savings profitable.
But it may also be a trap that financial markets have prepared to trap a good number of users. Because it is striking that this rise has occurred with a strong economic recession in the making and that it is already hitting the powerful German economy. When we cannot forget that what the stock market does is simply anticipate the future scenario, as has happened in recent decades and especially in the economic crisis of 2008. To the point that investors are a little clueless about what is happening in the international equity markets.
On the other hand, it should be noted that one of the keys to differentiate what would be an upward trend from the downward trend is at the 9.000 point level. That is, very close to current prices and therefore can be exceeded at any time. This in practice means that we are facing levels that are very fragile and cannot tell us much about the prospects for the national stock market in the coming months. Running the serious risk that we are facing a highly reliable bass trap that can keep us stuck in positions for a long time.
How will the false upload be detected?
Fundamentally because sooner or later the Ibex 35 would go back to trading below 9.000 euros. To the point that if it were, the first objective would be in the 8.300 points is that the point reached in the previous stock market crash. And if it were also exceeded, it could be directed to the 7.800 points that the reference point of when the Brexit referendum was held in Great Britain. In other words, one of the lowest levels in the history of the selective index of Spanish equities in recent years. Of course, this scenario cannot be ruled out.
While on the other hand, as long as it remains above 9.000 points, it will be a hope that the national stock market can continue in an upward trend, although with a very short and limited upward journey. To the point that in most of the proposals it is not really profitable to open positions. Because more it is easier for us to have negative surprises than for us to have ample returns in our investment portfolio. It will therefore be a level to watch by all small and medium investors from now on.
What will happen below 9.000?
At the moment in which this scenario so unwanted by investors occurs, a series of signals will be given that you can identify them in an easy and simple way. In this sense, some of them are the following: demolition of this important support with a higher trading volume than in other periods of the year. On the other hand, you have to leave a filter to confirm the new scenario and that it would be between 2% and 3% above the level object of the operation. In this way, false alarms that can harm our investment strategies will be avoided.
It is also very relevant that these movements are endorsed by other stock indices in our immediate environment. That they give full validity on the breakdown of the Ibex 35. You should know that you do not have to be very rigid in the application of the selected levels. If not, on the contrary, you have to keep some flexibility although within the limits required for this kind of operations. Where the small and medium investors with greater learning can better interpret these variations in the equity markets. In particular, with the main objective of undoing the positions before new and foreseeable decreases in the configuration of prices.
Negative weekly closings
Another method used to know this situation is to check the weekly closings of the last weeks or even months. They can give a little hint about which one is going to be comportamiento of the stock index in the coming days. Because indeed, another of the clues that we can have at hand is that the weekly closings are positive. At least for a couple of weeks and it will be a sign that heights can be achieved at the highest prices and that even the Ibex 35 could head towards the important levels at 9.800 points and already further away from the breaking point that is so concerned. small and medium investors these days.
While on the other hand, an improvement in the weekly price would mean that we could look with more optimism to the equity markets from now on. It is, in short, an investment strategy that has always been widely followed by investors with greater learning in this kind of operations. Among other reasons because its reliability can be considered as very high from all points of view. With great possibilities that we can have significant capital gains in each of the operations carried out in the financial markets.
Signs of the false rise
The worst of all is in the end it was a false rise and not a change in trend. A sign to realize this scenario so unwanted by small and medium investors is that a pull back with great force that takes the price of the shares below the levels of 9.000 euros. This time with the intention of staying for a long time, and what is worse for our interests, to deepen the losses from now on. Because in effect, there would no longer be limits on falls because the selling pressure would of course be very strong on the buyer.
Another trick to identify these movements is to show how the large values of the selective index of Spanish equities, the Ibex 35, great supports are left in setting your prices. To the point that in many cases they reach annual minimums with a strong volume of contracts that attracts a lot of attention to retail investors. As a clear sign that something very serious is happening to them in their stock market valuation. Being a very easy and simple system to carry out and that is at the hand of any small and medium investor.
Accompanied by other markets
In any case, for it to be a false alarm on the Ibex 35, there would be no choice if this kind of movement was indexed by other indices in our closest environment. As for example, in the French, German or even US equities. So that in this way we have a little clearer from now on that everything has been a trap for us to enter the stock market. This is something common that happens and what we have to try is not to be sensitive to this kind of very special movements that are designed by the strong hands of the financial markets. They must be avoided at all costs for our own safety.
In addition, we cannot forget that right now we are at a very decisive moment about what can happen in the equity markets. Because it can be directed one way or the other and the money is at stake to take these investment strategies lightly. Because although you can earn a lot of money in operations, you can also leave a lot of euros along the way. Where, investors is one of the segments that are most concerned about the instability of the equity markets at this precise moment. Anything can happen and in this sense we must be aware of any scenario that may originate in the stock market. With more defensive movements than normal in these cases.
Finally, mention that we must be very aware of what may happen with the supports and resistances since they will give us the guideline on what we have to do. Either open positions in the equity markets or, on the contrary, forget about the stock market for a more or less prolonged period of time. With the aim of preparing ourselves for what may happen in the coming months, which is, after all, one of our investment goals. To protect ourselves from unwanted movements for our personal interests in an effort to make the most of savings.