Ibex 35: April 2013 and the Mania for Buying Without Stops

April 2013: The Ibex 35 Gambles at 7,740 with or Without Stops

April 2013 began with the Ibex 35 in territory many had written off, and ended with it roaring back. At the month's start, references were the support at 7,740 and the 7,850-80 range; by the end, the conversation had shifted: would the rebound reach 8,500-600, or was it another trap for the unwary? In between, two unexpected plunges—those of gold and bitcoin—introduced the dreaded word into half the market's thinking: deflation.

The first thing checked each morning wasn't the index. It was US employment. Besides the unemployment figures, the calendar included April ADP (+158,000), China's Manufacturing PMI (50.9), the ISM (51.3), and the Federal Reserve's interest rate decision (0-0.25%). All this in a week when the Spanish market was closed for a holiday, much to the despair of those who live off this: when your home market isn't open, others move independently.

Support at 7,740 and 8,500 Within Reach

The technical roadmap circulating outlined two scenarios. The first: hold 7,850-80 in the trinc sessions and extend towards 8,250-90 first, then 8,500-600, an area where a "accumulation channel" was sensed. The second, the classic trap: a false turnaround leaving latecomers buying at relative highs just before yet another correction. "It would be a kind of doping for the index with its known consequences," summarized one of the most cited analyses.

The bolder ones weren't content with 8,600. Some wrote that they saw the Ibex above 10,000, even 11,000, while others, at the opposite extreme, fantasized about the index at 3,000. The rhyme circulating in the early days—"in April, a thousand rains, and I see the Ibex at three thousand"—perfectly summarizes the confusion: no one was certain, and almost everyone had a chart to justify their view.

Contracts Revealing the Big Players' Moves

The most detailed tracking was done by those who monitored aggregate futures contract positions. The numbers didn't add up: on March 8th, a net short position of -3,727 contracts was seen; on March 14th, with the Ibex at its peak of 8,669, the net was -3,450, and in the trinc three days, the index lost almost 500 points. The reading was simple: when the big players load up on shorts, trouble is brewing.

In April, the picture changed. Over 1,000 contracts were traded in a single session, with the balance at -2,000, and there were days with barely 452 net contracts despite all the firepower spent on the rise. The alert went off: "Perhaps they are having trouble getting buyers for their paper." Translation: if the big players can't find a buyer, the rally is built on shaky ground. The detail no one could explain was the nearly 60-point difference between the futures and the spot price during the bullish run.

Stop-Losses Yes or No: A €19,000 Difference

The most brutal and instructive battle was fought here. A veteran confessed a -45% loss on TRE for buying "on the day it was most expensive in over two years" and selling "on the day it was cheapest": -€19,000 in a few months. Another was left with a -12% loss when expecting -18%, and considered it a success. Conversely, someone boasted about leaving behind the era of buying Sniace at €2 only to see it at €0.40, or SOS from €1.60 to €0.26, or Telefónica from €15 to €11.

The recurring conclusion took the form of a maxim: "He who doesn't want to set stops might be saved once and recover, or twice, or three times... but there's one time that destroys you." Some even quantified the change in method. Four figures in net profit in 2012. Five figures in 2013. From faith to mechanism.

• Sniace: bought at €2, trading at €0.40
• SOS: bought at €1.60, trading at €0.26
• Telefónica: bought at €15, trading at €11

Why Does an Ibex Contract Put €70,000 at Stake?

Because leverage is the fine print almost no one reads. An IBEX contract moves around €70,000, and a eurodollar contract, $100,000, according to shared calculations. CFDs add guaranteed stops that widen the spread: you pay more for the peace of mind knowing you won't lose more than anticipated. "Normal" stops, however, sometimes disappear—and by a lot—with the opening gap.

The warning was for beginners: "Many don't realize the figures they are actually handling." A sizing mistake doesn't just leave the account at zero: it leaves it in the negative. The difference between investing and gambling lies in that detail.

Gold and Bitcoin Plunge: The Deflation Thesis

Mid-month, the unexpected event arrived. "The brutal drops in gold and bitcoin's price" led one observer to "lean towards thinking deflation is coming back," with the logical consequence: open short-term shorts or simply stay in cash, "remain in the trenches." When the ultimate safe-haven asset plummets, the narrative of antiestéticar shifts.

The simultaneous collapse of physical gold and bitcoin baffled both defenders of the gold standard and cryptocurrency enthusiasts. Money, suddenly, preferred to stay put. And with it, a significant portion of the market.

Telefónica and the Price War Devouring the Business

The operator ceased to be the usual safe haven. The cancellation of the call connection charge peine the floodgates: if a minute was already offered at 8 cents, the next step would be 2 cents. "Movistar's lucrative call connection charge, which has provided so much profit due to its massive customer base, is going to end," warned an analysis. The underlying thesis: a "smaller" telecom company, with tight margins and no longer the label of eternal dividend.

Some argued the opposite: "One or two more years without paying dividends would lower the debt significantly and leave the company in great shape." A third pointed to the tax detail: a large part of the cash was outside Spain, so repatriating it cost more than leaving it where it was. "It's how they are managing the company, very poorly in my opinion." The question remained open, as it did for most of that month.

Gamesa, Arcelor, and the DAX Drag

Technical analysis of individual stocks yielded headlines. Gamesa had reached the €2.70 zone, and from there, it was warned, it would have a "very difficult" time due to a "simply enormous" resistance. Arcelor was "very weak": without any significant bullish movement, with a clear path towards €6.74 if the support gave way. And E.on underwent a thorough review around €14.35-14.50, amidst RWE's dividend distribution and a market pattern—a "pulpo" (octopus)—that no one fully understood.

The underlying problem wasn't Spanish. The DAX and CAC threatened to drag the rest down "5-10% in the coming weeks," with the feeling that the central European markets were holding the pack back. "What a drag for Spain to have to pull the cart," lamented one of the staunchest defenders of the rebound. The rebound that, against all odds, eventually arrived.

Bankia, Pescanova, and the "For Spain We Will Go to War" Sentiment

Dark humor emerged with the troubled stocks. An individual who admitted buying Bankia at €3.65 cried out for help. The most common response was sarcastic: "It's a much safer investment than Bankia." With Pescanova in the spotlight, the phrase that summarized the mood was: "For Pescanova, for Bankia, for Madrid, and for Spain, we will go to war unprotected."

And there was FCC. An investor announced they would increase their holdings to 20,000 shares: "If it rises to 17, we're talking about €200,000 in reward." Underlying this was the bet on Juan Béjar and his plan to reduce debt "by hook or by crook," with the executive's remuneration tied to results. Big payoff or ruin. No middle ground.

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Why Didn't the INE Statistics Add Up?

The population figures were fluctuating, and no one could explain why. The most common suspicion pointed to naturalization applications: over 200,000 arrived at the registries during the Christmas season with a note requesting their resolution before December 31st, and 420,000 remained pending processing by notaries. The result, according to this interpretation, was "a few more Spaniards" who didn't appear in the accounts through natural channels. Official statistics, like much else that month, allowed for more than one interpretation.

The Index No One Could Read

The month ended without a verdict. The Ibex had rebounded, yes, but those who bet on 8,500 couldn't claim victory, and those who stayed in the trenches couldn't lament. The index tracking itself admitted, at the close, that the corrections had been "stronger than expected, especially in the DAX." "With the tools I have now, I can't be more precise," admitted the person behind the most trinc forecasts.

That's how it remained. With the index in intermediate territory, gold at rock bottom, Telefónica reinventing itself, and half of Spain debating whether the next big move was towards 9,400 or towards the abyss. April 2013 resolved nothing. It only made clear that, with or without stops, the market exacts a price.