Waiting for new agreements between the US and its main commercial partners to be known, and with the season of publication of almost finished quarterly results, Wall Street seems to set foot on the brake, after several sessions without stopping. The divergence with the European stock markets does not narrow … could Wall Street enter a consolidation phase?
In my opinion, we could perfectly be facing a temporary pause within a major bullish trend. The main US indices could still complete the tour to their historical maximums. The S&P 500 and Nasdaq 100 have 3.5 or 4% to reach them, and something else to Dow Jones. That, for me, remains the natural objective in the short term. It doesn’t take too long to think they can achieve it. However, in the absence of new relevant catalysts, it is logical that the market advances with saw teeth, more slowly, and even with somewhat erratic movements that can generate doubts. Even so, I still think that this complete recovery scenario is still valid. While the Nasdaq 100 is maintained above 20,160 points and the S&P 500 does the same with the 5,700, the bias remains clearly bullish. The graphics reflect this attitude: in most recent sessions the white candles or dojis predominate, which does not suggest a significant selling pressure. We do not even see clear consolidation signs.
Europe is triggered, and especially Ibex 35 and the Dax. These increases give vertigo and, in a way, «fear.» Is there any glimpse by technician that makes us think of a small correction in the short term?
For now, no. The Dax, for example, has already has five sessions consolidating above its previous historical maximum – marked in mid -March – and there are no technical indications that make think of an immediate change of tendency. If we compare with the key references that we have been observing in indexes such as the Nasdaq 100 or the S&P 500, that same technical level equivalent in the Dax is as remote as the area of 21,260 points is, and currently quotes around 24,000. That is, the distance from a possible level of relevant support is very wide, which speaks of the solidity of the German market. This fortress is not only confirmed, but is even surpassed by the behavior of Ibex 35, especially if we analyze it in dividend adjusted graphics. Technically, its appearance is impeccable: we are seeing new historical maximums practically daily, and not with warm movements, but with forceful candles.
It is evident that at some point this streak will end, but right now no technical element is glimpsed that allows us to anticipate or when or where consolidation or correction can begin. There are no signs of exhaustion or return patterns. Meanwhile, other European indexes such as Eurostoxx 50 or CAC 40 still have a certain route until they reach those same reference levels: Eurostoxx is missing 2.5% and CAC 40, 5%. Therefore, if the bullish context continues -as probable -may make more sense to position themselves in these indices that still have their way to go, instead of entering those who have already broken important resistances and quoted at maximum, as is the case of the DAX. It would also highlight the behavior of the Italian FTSE MIB, which has recently confirmed the breakdown of resistances and has made a technical pullback to the 39,770 points before resuming its bullish impulse.
In short, there are multiple interesting options right now in the market, especially in indices that have clear technical structures of continuity. This strategy also allows to reduce both the risks and the volatility associated with the movements of the individual titles, which can have a significantly greater beta.
Within the IBEX 35, the bank remains unstoppable, while another of the greats of the selective has lost a lot of land, Inditex (is negative in the year of 2% but has lost 14% since its annual maximums). Are the banks continue to have traveled? Is it a good time to go into Inditex at these levels?
In the case of Inditex, perhaps this is not the ideal time to enter. Because? Because in the last three sessions he has tried, without success, to overcome the mobile average of 200 sessions – located around 49 euros – and today yields terrain again. In addition, in the 50 euros zone it coincides with 0.618% fibonacci setback of the entire fall from the maximum of 54.90 euros. In summary, it seems to me that only above 50-50.40 euros, applying a certain filter, Inditex would become an attractive option, at least with the aim of recovering its previous historical maximums around 55 euros, which would mean a potential route close to 10%. Of course, right now it is convenient to contain the desire to buy Inditex, because, from a short -term perspective or Intradíathe technical context invites prudence. However, for the medium and long term, unless something extraordinary happens, Inditex remains the most attractive option in the Spanish market.
As for the banking sector, the behavior of the European sector index – the SX7E – is quite illustrative. In my opinion, the most powerful index to be susceptible to purchase is precisely the bank. The SX7E has exceeded levels not seen since 2009-2010, which reinforces the idea that the scenario remains clearly bullish. Currently the banking index quotes around 205 points, and the first objective is in the setback of 0.382% of Fibonacci of the entire fall from its historical maximums in 493 points, an even scarce goal. If we observe the graph, it is clear how the index has broken a bearish channel in which it was immersed since 2009. The amplitude of that channel invites you to think that the realistic objective would be to reach 0.618% of Fibonacci of the entire fall from historical maximums, which still leaves a considerable upward margin. For now, there are no technical elements that invalidate this positivity scenario. And in the Spanish market, virtually all bank values have an enviable technical aspect: they have broken relevant resistances and continue to set new maximums constantly. This is how bullish trends are built. This good tone of the Spanish sector could add European names such as Deutsche Bank or some Italian bank. In short, the banking sector is going through an exceptional moment.
Alerts on a possible Israeli military offensive against Iranian nuclear facilities concentrate market attention and have promoted the price of crude oil at $ 66.50 per barrel, below January maximum but in clear climb since last week …
If we look at the West Texas oil, the truth is that, for now, it fails to overcome the strong technical resistance that it presents in the area between 64.50 and 66 dollars. Only with prices clearly above 66 could begin to consider a more consistent bullish reactivation scenario. At the moment, oil is still trapped in a lateral range, with a solid base in the 56 dollars and a roof defined in the 66. It is true that today we are seeing increases, but they do not seem strong enough to anticipate a new significant impulse on the rise. The graph reflects it clearly: the current movement is still framed within that side channel, without signs still rupture.
The euro continues to gain ground against the dollar. It is 1.13. Every sees closer to 1.20. Is it a good investment option?
Honestly, it doesn’t seem to me. It is true that since it began to rebound in February, the Euro Dollar crossing has drawn a fairly clean sequence of increasing maximums, which is technically positive. This is how assets upload. However, there are elements that invite caution, at least in the short term. One of them is the strong correction that occurred recently after reaching the 1.16 area: the euro fell practically in a straight line to 1.10. This level also coincides with the 0.618% fibonacci setback of the entire rise initiated in 1.0730, which reinforces its technical relevance as support. In the short term, I do not rule out an attempt to attack the area of 1,1570–1,16, but beyond there, it costs to see a clear upward route, especially because I do not find solid macroeconomic arguments that justify continuity in the appreciation of the euro against the dollar.
In addition, the current level (1,13) is located at an equidistant point between the 1,1070 support and the resistance of 1.16, that is, it is a land of anyone: or attractive to buy or comfortable to sell, and also difficult to place the stop loss precisely.
Personally, I would keep aside for now. With the opportunities that we are currently seeing for variable income -and even in assets such as natural gas -I do not see reasons to assume risk in a crossing like the euro dollar, which also seemed to me one of the most manipulated.
And what other underlying income do you see with good prospects, beyond the bank already mentioned?
In addition to the European banking sector index, which continues to lead the bullish impulse, there are many more interesting opportunities in variable income. In the Spanish market, practically half of the values have a technical aspect that invites you to buy (and it is not that the other half looks bad, they are simply not so strong in terms of momentum).
Among the most prominent values within the IBEX 35 and the continuous market would mention: ACCIONA, ACS, AENA, all banks without exception, Ferrovial, Indra, IAG, Mapfre, Merlin Properties … In Europe, opportunities are somewhat more limited, in part because the euro Stoxx 50 is already close to its historical maximum Bank, Telecom Italia and from now on. In the US market, there are also very interesting names such as Boeing, IBM, Visa, Netflix, Nvidia, for profiles with greater risk tolerance would highlight Tesla, General Electric, Alcoa …