Editorial Contributor
Buy IBEX 35: Target 10,000 Stop Loss 7,200 The inspiration for the buy recommendation on the Spanish blue chip index is two-fold. The first is the way that, as far as the financial media is concerned, this country is a one way street of 25% unemployment, massive sovereign debt and a burst real estate bubble. Indeed, apparently there is not one positive thing to say about the Costas and there has not been for over five years. Even worse, to my knowledge, you do not even have Spanish people blowing their trumpet either, largely so as not to antagonise our Catalan friends who have managed to muster up enough bravery in an attempt to abandon what is a sinking economic ship named Titanic (i.e. secession from Spain).
Given such a background, the current technical set up on the daily chart of the IBEX actually looks quite appealing (technicals, of course, always lead, and so sunnier uplands may be around the corner for the good ship Spain). This is said on the basis of two tests of support in both October & November around the falling 200 day moving average — now at 7,363. In fact, the probes did not touch the 200 day line, something which you normally only see ahead of strong continuation moves to the upside. The upside for the start of 2013 while the 200 day line is held should at least be between the 2 year resistance line at 9,500 and the old July 2011 resistance at 10,000 plus.
CHART - IBEX 35
64 | www.financial-spread-betting.com | January 2013