Ibex 35 in April 2015: QE Pushes Towards 12,000 Points

April 2015: Ibex Heads for 12,000 with ECB's Tap Open

In April 2015, making money in the stock market wasn't an achievement; the challenge was enduring the boredom. The Ibex 35 had been rising for months, the European Central Bank was buying debt at a rate of 3 billion euros daily, and trading desks were debating not whether the index would hold, but how long it would take to reach 12,000 points. It had come from 6,000.

The euphoria had an uncomfortable, almost obscene, side. Everything is rising so much it's even boring, summarized one of the most trinc investors at the time. The apocalypse they had been predicting for years wasn't arriving. And while it didn't arrive, every dip was bought with both hands.

The QE That Changed Everything: 3 Billion Daily

The ECB's asset purchase program was the main bullish argument of Spring 2015. With deposits and fixed income yielding next to nothing, money sought returns in the stock market out of necessity. The dominant thesis was simple: as long as the central bank injected liquidity and rates remained rock-bottom, any fall would be a buying opportunity.

Some even put it bluntly: QE isn't a bailout, it's a soft reset of debt, and the alternatives to that operation would be far more dramatic. On top of that, macroeconomics supported it. The eurozone closed the fourth quarter of 2014 with a current account surplus of 69.4 billion euros, with falling oil prices and a devalued euro acting as tailwinds. Everything added up. Too much.

From 12,000 to 8,100: The Targets Discussed

No one agreed on where the Ibex 35 would stop. The most optimistic scenarios spoke of 12,000 this year and 13,000 the next. The most technical set intermediate targets at 12,250 and 12,500. And on the other side, a handful of doomsayers argued that a Greek default would trigger a topping pattern with a target at 8,100 points.

Amidst this crossfire, actual trades. Short covering at 11,520 and opening longs at 11,450, all in the same morning. A weekly range with a high of 11,170 and a close at 11,150. Barely twenty points difference, summarizing weeks of indecision disguised as a trend. The opening gap was closed before lunch; the bearish target of 10,650, where the 200-session moving average passed, was still waiting.

The Stocks Left Out of the Rally

Not everything was rising. While indices hit highs, steel and commodities were bleeding. ArcelorMittal offered an undeniable bearish primary trend: supports were broken one after another, and volumes on the NYSE left little room for imagination. Little faith could be placed in a miraculous double bottom.

The sector dragged down anyone looking at it. Vallourec was plummeting without steel tube manufacturers reacting downwards. Alpha Natural celebrated its first profit in 13 quarters, with a gain of 364 million dollars, and still, nothing. The old rule held: don't catch a falling knife.

95% Who Start Trading Lose Within a Year

The shine of the rally hid another less segarro statistic. The figure repeated then was that 95% of those who start trading don't make it to the end of the year with their account intact. Buying high, selling low, paying commissions, and calling it a system. The result is well-known.

Against this backdrop, the feeling that the market was rising for no reason generated healthy skepticism. No one fully explained why the easy money lasted so long, or when it would stop. And those who warned too much ended up accused of being professional party poopers.

With the ECB buying 3 billion a day, the right question wasn't when the Ibex would correct. It was what would happen the day the tap turned off, and whether anyone would have grabbed a chair before then.