The bear market already has a floor to cling to that remains at 3.6%

Fear continues to run like wildfire in the market and this Monday, after a weekend in which Russia bombed the humanitarian corridors, the opening hit another downward blow to the main European stock markets, with falls that came close to 5%. However, as the session progressed, the purchases were imposed until finally closing the day overcoming the falls, although not enough, because They ended up closing in the negative.

This does not change the technical situation in Europe at all, which we recall came into bearish territory last friday, a day on which the critical supports located at 3,600 points of the EuroStoxx 50, which was the area that separated a correction from something much more serious, were lost definitively. “That it has lost that level of theoretical support without offering almost resistance is anything but somewhat bullish and opens the door to a bear market in which additional falls of 20% to levels where the EuroStoxx 50 was trading before the first vaccines against Covid 19, specifically in the area of ​​3,000 points”, explains Joan Cabrero, adviser to Ecotrader.

Since marking annual highs in January, Europe has already lost 20%. In addition, with the close of this Monday, at 3,512 points, the European stock market is to less than 20% of the new supports marked that, if exceeded, would represent a purchase area. At the beginning of this week he has even scored 3,387 points, an area that Cabrero called a “temporary” bottom of falls. “The lows seen today have signs of having been a floor, I understand that temporary, in short-term falls, and the point of origin of a rebound that a priori I see as vulnerable and prior to greater falls that could still have a wide margin for ahead,” adds Cabrero. “An approximation to those resistances would see it as a opportunity to reduce exposure to the European stock market, that we remember that we recommend having around 30%. Liquidity right now is a precious commodity as it will be the ammunition needed for when the market calms down and we can identify a reliable bottom on dips,” he concludes.

This Thursday, in addition, the European Central Bank will meet to set your roadmap with the new situation and the institution could change the step taking into account that until the conflict broke out the market expected that they would already start the withdrawal of stimuli. For DWS experts, “central banks are likely to be more cautious than expected not to put additional pressure on economic growth and technology stocks are benefiting from this.”

On the day, most of the European indices opened the session with significant drops that finally managed to cut, to end up closing with setbacks that, at worst, they approached 2%.

This was the case of the German Dax (DAX.XE), which opened the day with a fall of close to 4% to end it with a decline of 1.98%. Something similar happened in the case of the Ibex (IBEX.MC). The index began the week losing more than 2.7%, to end up closing with a fall of close to 1%.

Inside the Ibex, banking and tourism were the hardest hit. IAG lost 6.44% of its value and Aena followed suit, leaving 5.94% on the floor. For its part, Meliá suffered a decrease of 2.26%.

One of the reasons that stopped the debacle in the markets was the Kremlin’s request for the cession of Crimea and the recognition of Donbas by Ukraine to offer a ceasefire. In addition, the European Union began the procedures for Ukraine to enter as a member country.

Despite this, volatility continues to be the great protagonist in the stock markets during these weeks of invasion. The main European indices register losses of more than 7% since the siege of Ukraine began (see graphic). The selective most affected in all this time is the German Dax which, in the last eight days, has fallen by 12.28% and in the year it has suffered a decline of 19.2%. The European selective, the EuroStoxx 50, is not far behind the French stock market. The benchmark index for the Old Continent has fallen by 11.6% since February 24 and its decline in the year exceeds 18.2%. In national territory, the Ibex has been one of the indices that better has resisted the volatility produced by the war. The selective of the 35 has lost 9.4% since the invasion and its decline in the year amounts to 12.27%. Although, without a doubt, the London stock market has been postulated as the index that has best withstood the pressures up to now. Since the beginning of the conflict, it has fallen by 7.18% and in the year it has dropped by 5.76%.