Ibex 35 Faces a Season of Cading Momentum and Strategic Stock Picks
The Ibex 35 has moved decisively this year, climbing roughly 20 percent and trading about 10.85 percent above its late-October low. This notable rebound comes as inflation cools in the United States to around 3.2 percent and in Europe to about 2.9 percent. Market watchers point out that Spain’s political tensions do not seem to derail the overall trend, and many analysts expect central banks to pause rate hikes in the coming months, with some speculation that July could bring a cut in the cost of money if the economic cooling persists. These conditions help explain why the index has attracted renewed attention from investors seeking portfolio resilience amid slowing price growth. Based on these dynamics, the Ibex 35 looks poised to test new territory in the near term.
With 10,000 points within reach, a level not seen since February 17, 2020, just before the global outbreak of the Covid-19 pandemic, the index has shown a remarkable recovery in recent weeks. The ascent has been striking, and the market is now testing the upper boundary of its annual peak. Luis Francisco Ruiz, an analyst at CMC Markets, describes the move as a powerful upward thrust occurring during a historically bullish phase for equities. He notes that investors should watch how the market consolidates above the year’s maximum zone, suggesting strong upside momentum remains in play during this seasonally favorable period for equities often referred to as the year-end rally. The current environment continues to attract capital as traders look to lock in gains before potential volatility reemerges around the holidays.
Analysts and investment banks broadly express an optimistic outlook for the Ibex 35 over the next twelve months, forecasting a potential revaluation of about 16 percent and a target near 11,430 points. Ruiz emphasizes that these highs tend to coincide with the seasonal strength of the markets in late December, when institutional investors rebalance portfolios and some funds aim to capture annual performance. Still, pressure from leading U.S. markets can be a moderating force, as global shifts in risk appetite tend to pull Western stock indices in a similar direction during these periods. The combined effect of strong domestic momentum and external market forces creates a complex but potentially rewarding setup for the Ibex 35 in the near term.
Last month, the Ibex 35 ranked as the third-best performing index, trailing only Brazil’s Bovespa with a gain of about 10.3 percent and the Nasdaq in the United States with roughly 8.8 percent. The market’s recent velocity pushed price oscillators into overbought zones, creating what some traders describe as a moment of dizziness among those chasing the year-end rally. For investors seeking entry points, the immediate support level around 9,623 points has been identified as a potential entry zone, reflecting the bullish guidance starting from October’s lows. This level could serve as a pragmatic anchor for those adopting a measured approach to participation in the short term. The current setup suggests that the market may experience a pause rather than a sharp pullback, aligning with the expectation of a gradual cooling rather than a dramatic reversal.
For investors looking to enter positions now, a strategy is to focus on stocks that have lagged behind the recent gains but show signs of renewed activity. Sectors with improving volume and less extreme overbought conditions could offer more attractive risk-reward profiles. The recommended names include ArcelorMittal, Repsol, Logista, Acciona, and Redeia. In evaluating these candidates, several criteria guide the selection: stocks that are further from their annual highs, with lower distance from the 200-session moving average, and those exhibiting rising trading volumes. A preference is given to companies that demonstrate greater cash activity, which can indicate stronger liquidity and resilience in fluctuating markets. These screens aim to identify names that have not yet fully absorbed the recent move and that possess the potential to participate in further upside as confidence returns to the broader market.
Among the five stocks highlighted, Repsol and Redeia (formerly Red Eléctrica) belong to the energy sector and could experience continued price movement throughout the period ahead. Political developments, such as fiscal measures like windfall taxes introduced in 2022, remain a factor for energy players as policymakers seek to balance profitability with broader economic goals. Nonetheless, the energy complex often behaves differently from other sectors when interest rates shift, and investors may reassess exposure accordingly. In this context, the sector’s performance will likely hinge on the pace of inflation, economic activity, and the trajectory of monetary policy. The dynamic relationship between inflation trends and sector profitability means that the energy names on this list could offer upside if inflation continues to ease and activity cools. Redeia currently offers a dividend yield near 6.8 percent, while Repsol provides around 5 percent, underscoring the income component that can help temper price volatility during transitional periods.
According to Ruiz, if inflation and activity keep retreating, there could be renewed appetite for energy stocks as investors look for equities with attractive yields and solid longer-term fundamentals. The combination of favorable valuations, improving volumes, and solid cash generation supports the idea that these stocks have not yet exhausted their upside potential. Traders and long-term investors alike might find meaningful exposure in names that balance growth prospects with income generation, especially in a market environment where traditional fixed income remains less responsive to price pressures and central bank policy moves. The current evidence points to a period of selective opportunity, where disciplined stock-picking and careful risk management could help investors take advantage of a potentially constructive finish to the year. In short, the Ibex 35 and its component plays offer a compelling canvas for those seeking to align capital with secular themes and tactical entry points, while staying mindful of the broader macro landscape and the possible twists from global markets.