The IBEX 35 has shown a week of significant increases that have led to its first important and decisive resistance, the level of 7,210 points.
It is necessary that you exceed that level and above all that you end up closing your weekly candle above it. It could be considered as the first step for the recovery of the index.
Causes of uploads
The stock markets are interpreting that the worst of the pandemic is happening and they do not want to think about the risks and effects that the coronavirus has on the economies, that is, the markets have been decoupled from the evolution of the economies.
Stock markets are an indicator ahead of the economy, but what is not clear is that the US economy will recover in a “V” as the stock markets point out. This is worrying, but there is an irrefutable fact and that is that the bags are rising.
The indices of the European stock markets are lagging behind those of the US, but the possibility was announced yesterday that the countries could access a reconstruction fund of 750,000 million euros, based on the issuance of large-scale debt. Of that figure, 140,500 million would go to Spain but targeting 77,324 million as non-refundable subsidies and 63,122 million would be credits to be repaid in the long term.
The EU fund will have to resolve the opposition of the so-called Northern countries that do not like this option at all and also demand spending control and reforms. At this point is where in Spain the first conflict will arise, accept control and compliance with EU requirements. After that, the following conflict will immediately appear, the distribution of the “loot”. But this is to anticipate events.
This injection of liquidity, to which the tension is alleviated, is to the banks and, as has been repeated ad nauseam, are the key to whether the European stock markets and especially the IBEX 35 may rise or not.
The other sector that has a decisive influence in Europe is the Automotive sector, which has also shown some improvement in terms of its sector price since the crash.
This simplification to the minimum of what is happening in Europe is what has encouraged their stock markets and supported recent increases.
Levels to consider in the IBEX 35
The stochastic of the IBEX 35 begins to show overbought levels but it can take several days in this situation without major problems for the index to continue rising.
The resistance level for it to continue rising, as seen in the graph is 7,210 points, must be overcome with the support of the banking sector. The support with increases in the rest of the European indices is also going to be fundamental if what we want is to see a consistent rebound in the index, as well as the support of the great values of the IBEX 35.
Daily chart of the IBEX 35 index
In the event that it could not break to the upside, we would return to the lateral started on March 24 in the IBEX 35 and with high probability we could return to its low area, the 6,424.
If the latter were to lose it too, we would probably return to the low of the year.
As it seems that the European indices and the IBEX 35 are gaining strength, let’s see the best case scenario.
In the best case
Tomorrow is the last day of the month for the stock markets, we will have a monthly candle closure and a weekly candle closure. If the closing of the candles is above the mentioned level and the banks in their corresponding level, we will be in the position of making decisions.
In that case, trading positions could be taken and almost certainly, there will be opportunities and we can find values that can be entered.
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