- The Ibex 35 in Spain felt rather hard during the trading session on Tuesday, as we plunged toward the crucial €11,150 level.
- Not only is this an area that is important due to the fact that there is a lot of market memory attached to it, due to the fact that previously it had been a resistance, but we also have the 50-Day EMA hanging around in that same region.
Ultimately, this is a very ugly candlestick, and it does suggest that perhaps we could see a little bit of a follow-through. However, I see a lot of support levels between here and what I would consider to be a major trend change, so I think at this point we could see either a short-term recovery, or even if we do see selling pressure, it’s possible that we could see plenty of value hunters underneath and I think at this point in time your job is to simply pay close attention to the idea of whether or not buyers come in and try to pick up European stocks overall.
Remember, Spain is a place where “hot money” comes into the European Union, meaning that it does tend to be more volatile, especially as the Spanish economy is quite often built on real estate, holiday vendors, and the like. Because of this, it does tend to be a place where people throw money into if they are willing to take a lot of risk, but in times of fear, Spain gets hammered while Germany may benefit.
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It’s an Uptrend Don’t Forget That
At the end of the day, we are in a major uptrend, and I just don’t see how you short this market. In general, this is a market that I think eventually will try to get back to the €11,500 level, which is an area that has been difficult to overcome. However, if we break above there it’s likely that the market could continue to go much higher, perhaps reaching toward the €12,000 level. With this being the case, I think that you need to pay quite a bit of attention to whether or not we can break above there.
Pay attention to the DAX, AMX, CAC, and MIB. If these European indices start to rally, then it is very likely that we will see the Spanish index follow right along. After all, you need stability in the European Union for Spain flourish.
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