The equity markets are still pending the already known as coronavirus crisis. While the numbers of those affected continue to rise and the number of fatalities has already exceeded a hundred, the bags on either side of the Atlantic are waiting to learn about new details of their progress through Asia and the rest of the planet.
They do so after having yielded yesterday the first levels of support that had been slowing down the declines in recent weeks. And, yesterday, the most bearish of the European selective since October 2019, left the continental exchanges in a position to face further falls in the immediate short term.
At least according to the technical aspect they develop. The first theoretical support zone does not appear until 3,595 points of the EuroStoxx 50 and it cannot be ruled out that the correction deepens towards the 3,525 points. This is stated by Joan Cabrero, director of strategy of Ecotrader, who officially concludes the rally bullish originated in August.
“Once we can conclude the rally bullish originated by the EuroStoxx 50 from the 3,250 points the door to greater falls is open. Now we have to identify the potential turning areas from where the upward trend could resume. We talked about waiting at your fingertips as ideal areas to look for a purchase window, “says Cabrero.
These potential turning points are those that will be expected from Ecotrader to increase exposure to the equity market again, in order to take advantage of an upward trend that still has a long way to go in the coming months.
In the case of Ibex 35 “we expect greater short-term falls that will probably not find support until the area of the 9,225 -9,100 points, which is where a priori we recommend buying again to get on the Spanish stock market in search of a new counterattack to the fundamental resistance of the 9,800 points“, says the strategy director of Ecotrader.
Temporary roof on the absolute free ascent on Wall Street
In the US, fears of the consequences that the outbreak of coronavirus would have on the Chinese economy and therefore the world economy, also led the main Wall Street indices to record setbacks of more than 1.5% on Monday.
“The signs of exhaustion that we observed last week on Wall Street were accentuated yesterday with the bearish gaps that opened the main benchmarks,” says Cabrero, who says that “as long as these gaps are not closed, we will not rely on greater temporary increases.”
However, a correction must be seen as something quite normal within the strong trend that Wall Street develops. “It will probably be a temporary pause,” says the expert.
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For readers who want more: Ecotrader, the investment strategy portal of 'elEconomista'