The IBEX index initially rallied on Wednesday but has run into a bit of a headwind via the overall risk appetite globally. This makes a certain amount of sense because the IBEX tends to be very sensitive to risk appetite, as Spain is considered to be a much riskier economy to get involved in than one such as Germany. The IBEX tends to be very volatile, so a pullback at this point makes sense due to the fact that we had been grinding away to the upside.
You will notice that on the chart, I have an ascending triangle that sits just below current trading and has offered a bit of support previously. Because of this, I think it is probably only a matter of time before we see buyers try to defend this area, but I think it may be better thought of as a “zone of support”, extending down to at least the €9000 level. Because of this, you need to be very cautious, but I do recognize that we will probably have a scenario in which the markets will be taking their cues from other places around the world.
The 50-ay EMA currently sits at the 8935 handle, an area that defines the very bottom of the potential buying opportunity that I see. Furthermore, if we were to break down below that level then I think it could be a scenario in which you short this market, instead of trying to short something like the DAX. The market breaking down like that would more than likely coincide with a lot of selling pressure around the world.
The market turning around to break above the highs of the last couple of days could send this market towards the €9200 level, and then perhaps even a reach towards the €9400 level. That would be more of a “risk-on position”, but right now, as I am watching the markets globally, it is going to take some type of significant turnaround in attitude to make that a reality. I think the best case scenario to get bullish again is probably going to be a scenario where we go back and forth and simply kill some time. I will be watching this market with great interest, because it can give you a bit of a “heads up” as to other indices such as the DAX.
