The Spanish index closes September just above 19,390 points, the base of the lateral movement it has maintained for the last sixteen sessions. If it loses this level by the end of this week, the market would assume a correction that could take the index down to 17,800 points, an 8.5% drop.
The Ibex 35 has finished September in the zone of August lows, just above 19,390 points, which is the base of the lateral movement it has been developing for sixteen sessions. The monthly close leaves the index below 20,000 points, after a 2% decline for the month, according to elEconomista. The last time a similar monthly close was seen was in March, when the most significant correction of the year began to take shape.
The technical advisor of Ecotrader, Joan Cabrero, points out that of the last sixteen daily candles, eleven have a real black body, meaning the close has been below the opening level. In Japanese candlestick theory, a high succession of black bodies reflects that selling pressure has prevailed from the opening to the close. This alone is not a sufficient signal to confirm a correction, but it also does not convey buyer dominance.
"In that scenario, I would favour an initial drop towards 18,780 points and would not rule out a return towards 18,300 or even 18,000 points"
Cabrero warns that if 19,390 points are lost, the conversation would shift from consolidation to a full-blown correction. A correction replicating the magnitude seen in March could take the Ibex even down to 17,800 points, which from current levels would represent approximately another 8.5% drop. "You can identify when a correction starts, but never in advance where it will end," says the advisor, who insists on closely monitoring the close of this week.
The rest of the European stock markets also closed September in negative territory. The German Dax fell nearly 3% and the French Cac dropped over 4%. In Europe, the rise in prices due to the war in the Middle East is putting pressure on both the stock market and the debt market. In the United States, August inflation data was lower than expected, providing relief to Wall Street, but it did not prevent the negative tone in the Old Continent.
Among the warning signs, corporate bonds rated CCC, the worst within junk bonds, are recording the worst spread against US sovereign debt since 2023. Risk aversion is driving the premium for buying these securities to levels not seen since the regional banking crisis in the US that originated with Credit Suisse and Silicon Valley Bank. Since April, spreads on CCC-rated debt have increased significantly as a more restrictive monetary policy puts pressure on companies with higher financing costs and elevated leverage ratios.
In the commodities sector, global agricultural prices have recorded the largest quarterly increase since the invasion of Ukraine in early 2022. New tensions in the Black Sea and extreme weather conditions are becoming obstacles for central banks' policies and their efforts to reduce inflation. The Bloomberg index that tracks contracts for grains, fruit pulp, coffee, or meat increased by 13% from July to September.
The level to watch is clear: 19,390 points of the Ibex 35. As long as it holds, the market can continue to talk about consolidation. If lost by the close of this week, the correction scenario would be activated with 18,780 points as the first support and, in a more severe scenario, 17,800 points.
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