The break above pivotal resistance at 8665 triggered my high-conviction buy recommendation in July, with an ultimate target projected to be 11,810. This target remains very much intact today, and Spain continues to be one of the better countries in which to have equity exposure.
In last year’s follow-up notes on Spain – most recently on 14 October – I also highlighted a tactic suitable for shorter-term traders. This involved selling the index at 9841 (where a 66.66% rise from the July 2012 low would be fulfilled) and buying back at the G2 level of 9435. This, too, was a successful outcome, as the index dipped just beneath the G2 level in early December.
The anticipated range-trading between 9435-9841 now appears to be over. Going forward, the key question is whether the IBEX can sustain above 9841. In this respect, recent price action sends a positive signal, as this month’s break back above isolated resistance at 10,010 demonstrates.
Recommendation: stay long. Target 11,810. Stop-losses can be raised significantly now, and activated only on momentum below 9600.