Ibex 35 in June 2013: A 12% Drop and an Uncertain Bottom

June 2013: The Ibex Lost 12% and the Bottom Never Arrived

The Ibex 35 spent the first half of June 2013 trapped between 8,200 and 8,600 points, and that apparent calm convinced a good part of the market that the bottom was already in. It wasn't. The index ended the month down 12% from its highs and individual investors discovered, too late, that they had been entering the wrong side of the move for weeks. The rally in the early days was a trap.

The levels being watched for the index's future—8,239, 8,072, 8,035, 8,021, and 7,984—served as steps in a decline that almost no one wanted to read in time. The question wasn't if the market was correcting. It was from where. And the answer that prevailed was uncomfortable: the fall didn't start at the end of the month, it started at 8,600.

The Levels That Marked the Collapse

On June 24, the supports that would hold the final stretch were established: a medium-term channel support at 7,635, a bullish accumulation zone between 7,835 and 7,932, and a channel resistance at 8,289. During the trinc sessions, the futures respected these references almost to the pip. First, the accumulation zone was touched; then came a capitulation phase that took the index below 7,730.

There were live trading calls, both on the DAX—with a ceiling at 8,350 and a bearish target in the 7,800-7,700 band—and on the Ibex itself. The prevailing advice was simple and brutal: rallies were for closing long positions, not for buying again. The pattern repeated for weeks and left a reference figure on the table, a theoretical target of 6,800 points if the bearish pattern completed.

The Trade of the Month: Gamesa Almost Quadruples

Amidst the disaster, one trade became the story of the month. 100% of the position in Gamesa was liquidated at 3.992 euros per share, with an average purchase price around 2.90 euros. The result: nearly quadrupling the investment in a single move. “Today I got off the Gamesa bus,” its author summarized.

The gesture had a sarracena. The money wasn't made by buying at the exact low, it was made by holding until the moment to exit. Others, however, took advantage of the weakness to enter the same stock at 2.83 euros, convinced that there was still room to run. Gamesa ceased to be a rebound bet and became a lesson on when to get off.

The Market Manipulation Theory

Every month of decline has its narrative, and June 2013 was no different. The dominant thesis was manipulation: the idea that an invisible hand was catching the orders of small investors and forcing them to trigger stop losses. “The manipulation of the last 2 months has been terrible,” it was even written. Two consecutive failed rebound attempts were counted, with a third underway that failed to consolidate.

Against this interpretation, quantitative analyses tried to separate the wheat from the chaff. The distinction between who truly moves the price—strong hands and algorithms—and who chases the movement—the exhausted buyer and the panicked seller—structured the discussions. The data spoke of repeated episodes of exhausted buying in the DAX, with a textbook outcome: entry of the less informed, liquidity sweep, and subsequent collapse.

Why Was There Debate About Whether the Bottom Was In?

Towards the end of the month, the question shifted. It was no longer debated whether it would rise, but when it would stop falling. Short positions were released in the 7,795-7,725 band and longs were loaded at 7,730 to attack a rebound. US and European indices were expected to close their downward gaps. And the charts provided arguments for both sides: a textbook head-and-shoulders pattern marked a bearish target of 6,800 points, but the accumulated oversold condition invited thoughts of a violent rally.

The most repeated warning was always the same: whoever wanted to catch the exact turn would pay dearly. The trend dictates, and guessing the turning point was the trap that investor ego fell into. It wasn't the only warning. The most pessimistic reading placed the Spanish index's purging process extending until 2016.

The ECB Opens the Door to Stimulus

The macroeconomic backdrop was set by the European Central Bank. In June 2013, Mario Draghi stated that the institution was ready to implement unconventional measures. The news was read as a lifeline for peripheral markets and, above all, for banks. It was one of the few factors that provided air to Spanish banks, singled out as the key piece of the index.

The two major banks could provide "a significant upside surprise" if they held certain levels. The counterargument also weighed heavily: with a potential haircut on Portugal's debt, the exposure of a Spanish bank like Santander to that country became a serious risk. For the most punished stocks, the diagnosis was harsher: intervened banks were predicted to face more capital adjustments.

210-Day Notes: The Fine Print of Credit

Aside from the charts, the issue that caused the most discomfort related to how suppliers were being paid during the crisis. The description was devastating: companies wanting to get paid were offered two paths, a transfer at 90 days without being able to discount the note, or a 210 or 270-day note that, coincidentally, could only be discounted by the group's own finance company at a cost above market rates.

As paying at 210 days was illegal, the supposed way out was for the supplier to sign a letter asking to be paid late. What was theoretically a voluntary concession was, in practice, presented as covert coercion. The result, according to several analyses, was the same for thousands of small businesses: “Entire families by the hundreds of thousands are condemned to misery.”

Edgewater and the Mine That Wanted to Pay with Other People's Money

Another open front was small-cap stocks. Edgewater Exploration landed on the table, a junior miner whose flagship project was Corcoesto, in Galicia. The valuation suggested by its own numbers was minuscule, around 7 million euros in market capitalization, and the preliminary antiestéticasibility study had been done assuming a gold price of $1,300. "It seems they want to do everything with other people's money," summarized an analysis.

The added problem was environmental. The project included a toxic sludge pond so large that, in case of rupture, the estimated damages amounted to 350 million euros. The question that no one answered convincingly was how a company with no income or short-term prospects, and which reportedly needed $5 million to pay salaries, intended to cover such a risk.

The Fever for Tangibles: Bitcoins, Gold, and Hedging

While some sought the bottom in the charts, others prepared for the worst. Bitcoin and gold appeared in discussions as refuges, along with the purchase of puts on the Ibex or US indices. “You have to be prepared for when the day comes,” summarized someone betting on hedging. It wasn't gratuitous pessimism: the memory of 2008 still weighed heavily, and the valuations of some US tech companies invited distrust.

The contrast was notable. Spanish banks were trading at half their 2008 ratios, while major US tech companies were at historic highs. This gap was seen as an anomaly and, for some, as the definitive argument that money was jumping from asset to asset awaiting the next correction.

The Close: The Bottom That Is Never Seen Coming

With the Ibex struggling below 8,000 points, the uncomfortable question that remained floating was almost impossible to answer: was the bottom approaching, or was the bottom just another calendar station? The references being used suggested that the index's purging process could extend until 2016. Others, however, were already preparing ammunition for the opposite.

The fall, at least, served one purpose. It made it clear that whoever bought in the 8,600 sideways range expecting a short swing was left watching the market pass them by. The lesson of June 2013 wasn't technical; it was about humility. And in markets like these, humility is the only thing not correlated with profit.