Where are we in the markets?

In a scene of confusion as the present, where in a matter of days the market sentiment changes so abruptly, it is very complicated navigation of small investors in troubled waters.

Like a shock to wake up from a bad dream it were, and americamos European indexes rebounded strongly yesterday; IBEX: + 14.43%, Eurostoxx: + 10.35%, SP500: + 4.40%, to settle at levels of early last week. Volatility, nerves, tension and panic in the markets it went to euphoria heat pack € 750.000 million in EU aid to the economies of the euro area so require and the conditions existing oversold.

Leaving aside the political and economic appropriateness of the measures taken, what interests the investor on foot, as can be affected markets in the coming weeks and to make decisions that will not be caught off guard.

So the question arises: Have you recently seen was a blip or only warning of what may come?

Consider the following comparison chart of the evolution and current status of the IBEX, EuroStoxx and SP500 indexes.

 

At first glance we see that the Spanish index is the worst of it, although Europe seems better-looking headdress, while the US still maintains a bullish appearance despite setbacks.

A more detailed technical analysis shows as IBEX, despite the rebound, trading below its SMA200 (SMA 200 days), drilled important resistance levels at 10,000 and 9,300 points and is located in a downward channel, these conditions are not usually characteristic of a bull market and bearish technically.

For its part, the EuroStoxx but with better technical aspect is also below its SMA200, has drawn a double top and drilled clavicular line in the area of 2,600 points, which could say that is technically “touched” the low.

While the SP500 still retains its bullish tone, as it bounced off his SMA200 and stayed away from the major resistance at 1,050 points. However, the rise in volatility ($ VIX) and loss level of 1,180 points, which had installed the last month, suggest caution.

What should you do?

As for equity markets, beyond the inherent oversold conditions “rallies”, there are no clear signs of purchase.

It’s time to take precautions and to limit our exposure to these assets. If we unrealized gains and aflorarlas we should not have to consider strategies for portfolio hedging with options, futures or other derivatives.

As for taking short positions, better wait for the improvement of indicators and technical aspect of the indices, although this does not preclude selection strategies specific values ( “stock picking”) of very concrete companies with good fundamentals, with a market solid and solvent, and at an attractive price.