IBEX poised to complete 66.6% rise

Price at time of writing – 9668. Today I review my high conviction, buy recommendation on Spain's IBEX 35 index. 

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.

IBEX 35 chart

No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.