IBEX35/EUROSTOXX50: Preparing for Imminent Volatility

16 sept.

European stock markets, boosted by the ECB's recent meeting, have managed to ward off the fears that plagued markets in early September. Although the recent rebound has helped the indices to stay away from the August lows, it is not yet a definitive recovery. The declines at the beginning of the month have proved too deep to be considered a simple consolidation, suggesting that additional bouts of volatility may be ahead before a sustainable upswing. In this context, remaining calm, reducing exposure to the stock market if it is high, and being prepared for future buying opportunities is advisable.

On Friday, Spanish stock markets closed higher, with the IBEX 35 gaining 1.23%, reaching a new five-year high. The financial services, construction and technology sectors drove the rally. Inmobiliaria Colonial SA led the gains, while Bankinter and Redeia Corporación SA were among the losers.

It is crucial to maintain liquidity to take advantage of possible pullbacks, which will allow acquiring assets with a better risk-return ratio. Key supports to monitor include the 4,730 points of the EuroStoxx 50 and the 11,138 points of the IBEX 35. Looking at the IBEX 35 chart, there is solid support around 11,100 points. After overcoming double resistance last week, there is a possibility that the index will advance to new highs driven by volatility. The current RSI stands at 64.67%, suggesting that this upward momentum could continue, as long as previous fears do not affect its trajectory.

It is relevant to mention the EuroStoxx 50, as both indices have shown a high correlation recently. However, in the last week, their movements have been different, probably due to the practically null weighting of the EuroStoxx 50 in relation to companies in the Spanish index. The EuroStoxx 50 is moving in a sideways range near the strong trading zone of 4,843 points. With an RSI of 64.26%, this index could correct towards the lower indicated zone of 4,730 points.

Ion Jauregui – ActivTrades Analyst






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