IBEX 35, August 2011: The Battle for 8,000 Points

IBEX 35 in 2011: The War for 8,000 with Short Selling Banned

August 2011. The IBEX 35 had accumulated a drop of 17.29% in just eleven days of the month, a pace approaching that of other black months: October 2008 saw a 17.03% drop, and August 1998, the worst month, a 21.24% decline, according to data discussed in the thread. European banks were trembling, Greece was looming again, and each session was played out in a narrow, suffocating band. The number repeated like a prayer was 8,000. Below it, in the words of the traders themselves, it was "straight down."

The narrative of those weeks—from the black Wednesday that peine the series to the close of August—was built on charts, Fibonacci levels, and a growing suspicion among some forum members: that someone was moving the board with information others didn't have. And in the background, a question that no one could definitively answer: a technical rebound or the prelude to the second leg of the fall?

The 8,000 and the 8,800 Ceiling

Participants disagreed, but shared an obsession. A calculation circulating placed the rebound ceiling in the 8,700-8,800 zone: the first corresponded to 38.2% of the fall from 10,200, and the second to 61.8% of the entire previous rise between 6,700 and 12,240. As long as the index didn't overcome that wall, any rise was, in that reading, an illusion.

Below, the 8,000 support acted as the last trench. Breaking it would activate the serious bearish scenario, with targets that one forum member placed at 6,700 and 6,260, and he wondered if the month would close around 7,000. Some even doubted that a 20% drop in eight sessions was possible. One trader insisted on the need for stop-loss orders and discipline.

Guano for everyone. That's how they signed off each bloody day.

The Short Selling Ban: Makeup with an Expiration Date

In August, European regulators banned borrowing shares to sell them short. On paper, it curbed speculators. In practice, the consensus was that it was a cosmetic measure: what was already borrowed continued to circulate, and those who wanted to hedge a position had no way to do so. The most repeated argument: if you can't go short, how does the market maker who sells you a future protect themselves?

A thought experiment circulated on screens. A buyer enters with 100 million in Santander, and another borrows those same shares to dump them on the market. If the seller and buyer "went to school together," the price plummets, and the buyer repurchases cheaply. It was presented as manipulation with a white glove, or almost. No one managed to dismantle the reasoning, especially after seeing how the credit market continued to tighten.

Santander, the Convertible, and the Feeling of a Scam

The most discussed case had a proper name: Santander. The stock was trading around 5.82 euros when a 2007 convertible bond issuance, placed at a much higher price, was still active. Recovering that level required a rise of nearly 130%. The reaction of one forum member: "if that's not a scam, then God help us."

The -8.33% drop Santander suffered in a single August session hit the nail on the head. One forum member recalled being told at Christmas that at 7.20 euros it was very good and he would get rich.

The Unfailing Thermometer: iTraxx, Tel Aviv, and the BUND

While the stock markets rebounded, the credit markets told a different story. The iTraxx Crossover—the insurance against default for European companies—soared to 695.5/700 points, a +5.4% in a single day. For those trinc this indicator, the rise was a trap: when credit tightens, equities cannot be sustained for long.

There were also external signals. The TA-25 index of the Tel Aviv Stock Exchange plummeted by 4.39% in a matter of minutes without anyone being able to explain why. And one forum member warned about German fixed income: if the BUND was forming a large top, money could flee the safe haven in droves, and that shift would require a prior panic shock. There are only two options, and neither is comfortable: the system collapses, or the money is reallocated.

Brokers, CFDs, and Gold: How to Trade with Little

The practical part focused on tools. For those with little capital and seeking estimulante ilegal, the recommendation was clear: CFDs on the Ibex, with the warning to study leverage well before diving in. For the long term, the choice was reduced to two banks, one more oriented towards professional trading and the other designed for leaving shares dormant in the safe for years.

Gold was another temptation. ETFs like GLD, IAU, or SGOL allowed exposure to the metal without buying bullion, with the advantage of being able to set stop-loss orders and no maintenance fees. The downside, as always: it's paper gold. One forum member warned that he didn't like getting into businesses he didn't understand. The warning also applied to shares that another forum member had recommended as a "safe bet" in 2007 and which in 2011 were systematically the ones falling the most.

Gazelles and Lions: Who Really Moves the Market

The most veteran traders trinc the big money closely. The thesis, repeated session after session, was that retail sales—the gazelles—almost never move the price; it's the large blocks from those they called lions. In one day described in detail, a single trade at 4:00 PM moved 314 contracts to buy, and eleven minutes later, half were resold. For that forum member, that type of maneuver defined the trend.

Volume was also monitored at the closing auction: only purchases appeared, but of modest size. Translation: no one put up a fight on the other side, and thus prices rose with little effort. Smoke or accumulation. Depends on who was looking at the chart.

The Rebound That Never Came (or Did)

The session swings fueled skepticism. In four days, a European index rose by 20% after hitting lows and, just three days later, was 10% below them again. With those numbers, any prediction crumbled. "I don't know what to think either," confessed one of the most active traders.

Macroeconomic data provided ammunition for both sides. The US ISM manufacturing index fell in August to 50.6 points, from 50.9 in July and above analysts' expectations (48.5). The figure came in above expectations, and its interpretation was discussed in the thread. The reaction of the indices, with a 100-point lash in the DAX in minutes, did not help to decide.

Where Analysis Gets Stuck

With the Ibex trapped between 8,000 and 8,800, the Merkel-Sarkozy meeting already held, and Greece poised to return to the forefront, the conversation stalled. Some saw the start of a sustained rebound; others, a pause before a new bearish phase that would come, they said, hand-in-hand with Athens. The problem wasn't the destination, but the timing. And there, with fixed income, credit, and gold sending contradictory signals, no one could close the answer. It only became clear that August 2011 had become a lesson in how little one can know about the immediate future, even with all the world's charts in front of you.

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