HE mountain goat 35 Have a sweet moment. It has gained 20% so far this year and 10.85% since its October lows. This spectacular revaluation is due to the moderate course of inflation in the US (3.2%) and Europe (2.9%). And he doesn’t seem to be affected by the tense political situation in Spain. Investors predict that this will lead central banks to pause interest rate hikes in the coming months or even consider lowering the cost of money in July 2024 as a result of the economic cooling.
spanish selector He has 10,000 points within reach, a level he hasn’t reached since February 17, 2020. Just before the state of alarm and the spread of Covid-19 around the world. “The recovery of the index in the last three weeks has been vertical and the index begins to consolidate above the annual maximum zone. “It’s a strong upward momentum emerging during one of the most seasonally bullish periods for stock markets,” comments Luis Francisco Ruiz, analyst at brokerage CMC Markets.
The consensus of analysts and investment banks is optimistic about the future of Ibex 35. Revaluation potential in the next twelve months is 16%This puts the Ibex 35 at 11,430 points. As Ruiz points out, these highs come at a traditionally bullish time for stock markets in the so-called ‘Christmas rally’. This period is characterized by large purchases on Wall Street in the ‘last picture’ of many investment funds, with the aim of making annual profitability as good as possible and withdrawing short or bearish positions. Pressure from the New York Stock Exchange is generally dragging down all Western stock markets.
The Ibex 35 was also the third best performing index last month, only surpassed by an increase of 8.1%. Brazilian Bovespa (10.3%) and Wall Street Nasdaq (8.8%). “The verticality of the movement caused price oscillators to reach high overbought levels, resulting in dizziness to enter current levels. In this case, those who are counting on the year-end rally and looking for the buying side of the market can expect a setback that will not materialize. In this case, the first support level (recommended area to enter) in the short term will be found at 9,623 points, which is an estimate of the bullish guidance starting from the October lows,” says Ruiz.
Another option the analyst sees for those looking to buy now would be to participate in stocks that are lagging behind the gains. In other words, in stocks that are not overbought and whose trading volume is increasing: ArcelorMittal, Repsol, Logista, Acciona and Redeia. “To identify stocks with smaller extremes, we give a better score to stocks that are further away from the annual maximum and have a lower percentage distance from the 200-session average. To identify stocks with more activity, we give a better score to the long-term average in recent weeks.” “We give a better score to stocks that trade more cash,” he adds.
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Of these five actions, Repsol and Redeia (formerly Red Eléctrica) belong to the energy sector and could face the entire period of this action. Pedro Sánchez is subject to the extraordinary tax introduced in 2022 with the aim of collecting the bulk of the profits that ‘fell from the sky’. Likewise, it is often stated that stocks are a sector that has a negative correlation with interest rates, as they are considered the product most similar to bonds and therefore investors prefer to buy fixed income directly when the cost of money increases. and I sell such shares.
“If inflation and activity continue to decline, the market may regain interest in the sector,” Ruiz says. The attractiveness of these shares due to their overbought and low trading volumes is combined with their dividend yields: Redeia pays a dividend yielding 6.77% and Repsol 5%.