Ibex 35 Dreamed of 17,000, Closed 2010 at 10,000

The Ibex 35 Dreamed of 17,000 Points and Closed at 10,000

Was there really a Christmas rally in the Ibex 35 in December 2010? The index started the month around 10,000 points and practically ended it in the same place. The 17,000 that led the conversation were half a joke, a nod to euphoric times. The 10,000 were real, and they hurt.

A Short-Term Rebound, Not a Recovery

The dominant scenario among those who trinc the market daily was a rebound wave within a main bearish trend. Reference levels were between 10,330 and 10,400 points, with a more ambitious ceiling at 10,550. Nothing near 17,000: just a 3% gain before the market turned south again.

The drag came from abroad. The German Chancellor closed the door on Eurobonds and expanding the European bailout fund, a message interpreted as a warning to high-deficit countries: sort out your own accounts. The DAX, the star of optimism, began showing negative signs. Across the Atlantic, the S&P 500 was anticipated to move upwards from 1,180 to 1,220, with a projection to 1,255.

December 7th and the Antiestéticar of Deposit Flight

The red-letter date was December 7th. A call was circulating to empty bank accounts in protest, and the market nervously eyed the potential impact on already struggling institutions. The majority response was skeptical: a few extremists without a penny wouldn't cause people to withdraw their money. That same day coincided with a new round of Federal Reserve purchases, the POMO (asset purchase program), of between 6 and 8 billion dollars daily.

Real Estate Bleeding Out on the Stock Market

The real estate sector's picture was devastating. FERGO AISA fell 84% on the year, Quabit 73%, Colonial 65%, Metrovacesa 63%, Urbas 61%, Montebalito 58%, and Urbis 56%. Not even Cementos Portland (-46%), Acciona (-42%), Sacyr (-41%), FCC (-33%), or Testa (-32%) were saved from the shipwreck. Real estate companies, the market darlings three years prior, couldn't find a bottom.

And the detail no one wanted to face directly loomed large: Santander trading below 5 euros per share. Unthinkable a couple of years earlier.

Who's Moving the Ibex? The Big Packages

Sessions were trinc contract by contract. One day of high activity saw 1,263 contracts sold by 11:15 AM, 3,068 bought by 4:40 PM, and another 1,513 sold by the close, including the auction. Another day, a single order of 2,242 contracts at 9,943 points. And sudden purchases of 513 contracts mid-afternoon, with no news to explain them.

This is where suspicion arose. Orders that didn't justify the day's drop were interpreted as medium-term positioning with hidden intentions, a move that could take months to reveal itself. With low volume, the result is a market behaving like a casino without guarantees.

Little bread and terrible circus, someone summarized wryly.

The Sinde Law Disrupts Mid-Session

Amidst the stock market trickle, politics crept into the charts. Police prevented gatherings in front of Congress, displacing protesters to the Palace door, during the processing of the Sinde Law (online piracy law). It was reported that the PSOE had secured the PNV's entry into regulatory bodies and extended Petronor's concession in the Basque Country to save the bill, with CiU ready to abstain. A trade that angered allies and opponents alike.

From the Trading Floor to Real Life

One of the most closely watched traders announced his move to US futures. By contract, he said, it was time to stay quiet. Two others closed what they called the best trade of their lives: shutting down intraday trading to go long on diapers and short on parties. June would bring baby bottles to the room.

Year-end. Toasts, congratulations, and forecasts for 2011 ranged from a collapse below 8,400 points to the repeated joke that the Ibex would visit 17,000. Someone concluded the year with the list of real estate collapses. And another added, half-seriously, that on the first trading day of January, the market would go after everyone's money.

The 17,000 was never a target. It was the joke told when there was nothing to celebrate. A year after that December, it still held the same humor: none.