The recommendation, initiated in late July when the index stood at 8376, suggested the IBEX was poised to break above pivotal resistance at 8665 and, if successful, a subsequent surge should be expected. That key breakthrough did arrive, and the surge has currently stretched to nearly 1300 points. Importantly, the index is now trading within the anticipated range of 9435-9841. Although my ultimate target remains 11,810, some tactical short-term profit-taking can be considered.
Once the barrier at 8665 was swept aside, there were no further resistance markers capable of interrupting an advance toward my minimum target of 9435, where the significant G2 level resides in isolation. Although a little hesitation was noted at 9435, the IBEX displayed no signs of intimidation, and the index can now be expected to fulfil a rise of 66.66% from its unique low in July 2012. This would take the index to 9841.
A near-66.66% rise in less than 18 months is a huge move in any nation's stock market. That it has happened in a nation as large as Spain says much about its likely recovery from austerity-induced recession. Nonetheless, traders may wish to book profit at 9841 and look to re-enter on a pull-back to 9435.
Recommendation: Stay long. Traders may book profit at 9841, but look to re-establish long positions at 9435. Longer-term investors should patiently wait for the major target at 11,810. Stop-loss levels can be raised and activated only on momentum below 8670.