We have just started the month of November, which is usually positive. How do you see the situation of the indicators right now, both on both sides of the Atlantic?
If we look at the United States, which is the main reference for global markets, The recent correction is mainly because investors have not received the message from the Federal Reserve well. The US central bank has indicated that there will probably be no interest rate cuts for the remainder of the year, something that the market has not accepted positively. Although federal funds futures continue to price in a greater than 50% probability of a cut, that expectation has fallen from 90% to 65% in a matter of hours, significantly changing the liquidity and risk appetite bias.
In this context, the US market maintains a clearly bullish trend, but in the short term the indicators begin to turn downwardswhich could lead to a consolidation or slight correction phase. If I were to enter the market right now, the most prudent thing to do would be to wait a bit, allow some additional correction to occur, or at least allow some time for the market to calm down and stabilize. From there, facing the end of the year, we could consider entries again, since historically the last few months tend to be favorable.
Therefore, in the short term, anyone who is already in the market should maintain their positions with the stops where they are placed. Anyone who has not entered yet should wait a little longer to see if better entry prices are presented. In the case of the S&P 500, As long as 6,500 points are not lost and remain within that range, the structure remains bullish.. If the index then turns upward with a positive bias, a new entry could be considered.
As to Europaand especially in the case of the IBEX 35 we see that the index has rebounded from last Friday’s lows, which acted as support. The next relevant level is located in the guideline of increasing minimums that starts on September 2around 15,650 points. If that level were lost, the next support would be at 15,295 points. From there, it would be necessary to see if the market manages to stabilize.
In any case, the general trend remains bullish, Therefore, opening short positions in the medium or long term does not seem to be the most appropriate strategy. It would only make sense to propose bearish intraday operations, taking advantage of specific setbacks. But if the approach is longer-term, the risk increases, since the underlying trend remains positive and, furthermore, we are in a seasonally favorable period.
Before that short-term corrective phase you talk about, what stocks, from a technical point of view, could have become a buying opportunity?
In this environment, it is advisable to focus on the strongest stocks, those that perform better and can better resist short-term corrections. Among them, ACS stands out, which is close to its historical highs and It maintains important support in the area of 69.50 euros. As long as the value remains above that level, the corrections it may experience could be entry opportunities to continue betting on the positive trend.
To diversify by sector, within the banking field we continue to focus on Santander Bankwhich has had an outstanding performance. In part, this is because investors expected the Federal Reserve to lower interest rates, while the European Central Bank would maintain them, which generated an expectation of greater liquidity without affecting the profitability of the entities. Now, with the possibility that the United States will not lower rates or will do so to a lesser extent, the attractiveness for liquidity decreases, but the banking sector can continue to do well thanks to the profitability it still offers. As long as Santander does not lose 8.10 euros, or even remains above 7.89, Possible corrections could be seen as entry opportunities to continue within the positive trend.
Another value to highlight is Indrafrom the defense and consulting sector, an area that is gaining a lot of prominence lately. The value maintains a clearly upward trend, and the key level is at 46.90 euros. As long as it remains above that support, the corrections it may experience, even in intraday sessions, could be buying opportunities for the medium term. Ultimately, the most important thing now is to wait for this short-term corrective phase to complete and, from there, re-enter the strongest values when they show signs of turning or forming bottoms.
Despite these corrections, the truth is that we have, according to historical records, the best part of the year for the stock market. Do you think we will see a Christmas rally, which theoretically should have already started?
Most likely yes. Statistically, the last quarter of the year is usually the best for the markets. There is usually a significant inflow of capital derived from investment funds and pension plans, which supports the stock markets and helps boost prices. Therefore, the behavior of the market in this final stretch of the year is usually very positive.
However, right now we are immersed in a corrective phase, as we mentioned. We will have to observe the behavior of the S&P 500: if the index achieves an upward turn and the MACD confirms that movement without losing current supports, we could trust in the arrival of the Christmas rally. In short, it is most likely that the market will resume its upward path in the coming weeks, as long as there are no new factors that alter the current stability.
And how can we amplify our investments in this context?
One way to do this is by options platform sweepawhich allows you to operate with fully controlled risk. For examplein the case of the S&P 500, if it is thought that there may be an additional correction, Short intraday operations can be carried out, placing a stop or barrier above previous resistances. In this way, the risk is completely limited. If at any time there were unexpected news from the Federal Reserve or any other factor that caused a market turnaround, the position would be protected. Even in the face of possible bullish gaps, the investor would have his risk perfectly managed.
Subsequently, if the market corrects further and a clear bottom is formed, long positions could be opened by purchasing barrier options, placing the barrier or stop just below the new support that has been generated. If the market recovers and we enjoy a Christmas rally, the investor could benefit from the upward movement and the leverage effectachieving superior returns, but always with controlled risk. This would, without a doubt, be a good way to amplify our investments in the current environment.