IBEX 35 in March 2015: The Rally That Was Bought Without Being Believed

IBEX 35 in March 2015: The Rally That Was Bought Without Being Believed

How much can the IBEX 35 rise before someone decides it's too much? In early March 2015, the Spanish selective index was hovering around 11,200 points, and the question was no longer whether it would rise, but who would be left out. The atmosphere was one of contained euphoria, for those who looked at the chart and saw a 'healthy correction' where others saw a ceiling. On the table, an almost liturgical target: 12,200, that 61.8% Fibonacci level that was drawn as an insurmountable horizon. Whether the market met it or not was, at that point, almost secondary.

11,200 Points and the Correction That Never Came

The first days of March were lived with the nervousness of someone arriving late. The IBEX 35 was coming off an upward trend, and buy orders were piling up at levels that, three months earlier, many would have signed for with their eyes closed. Long positions were loaded at 11,040 with the idea that the market would give no respite to the bears. And it didn't, at least at first: supports held, and every dip was bought within minutes.

The problem was the texture of the movement. A forum user summarized it with uncomfortable precision: 'they don't let it fall to support levels, none of them; if you're not in, there's no way to get in unless you're a kamikaze.' Those who hadn't bought early were forced to chase the price or watch from the sidelines. Euphoria, yes. But euphoria with the door shut.

CFDs, Leverage, and the Ruin of the Gazelles

In parallel, the warning that had been circulating for months resurfaced: contracts for difference are a product that can cost you your house. The Australian supervisor, ASIC, had put it in writing: betting with CFDs is riskier than gambling on horse races or in a casino, because in a casino, the maximum you lose is what you bet. With a leveraged CFD, it's not.

The fine print that no one mentions in the courses is that the intermediary executes the orders as the principal, not the client. You buy the movement, not the asset. And the spread, silently, eats into every trade. A forum user recounted that, after a month trading CFDs on bitcoin, he had withdrawn 160 euros net from the 600 he deposited and left due to 'suspicious' server drops and stop-loss sweeps. Another veteran of the thread described it as 'pure and hard financial Darwinism.'

ArcelorMittal and the Knife That Never Stops Falling

If there was a debate that divided opinions, it was about the steel company. The numbers were stubborn: 950 million euros in losses in 2014 and 2.226 billion in 2013. The stock had accumulated more than seven years of declines from 64 euros and an 88% drop since 2008. The market capitalization was around 15 billion, and the global excess supply of steel weighed like a slab.

Against this, the patient buyer's thesis: a company present in dozens of countries, with the capacity for cost savings in financial expenses and enormous potential for appreciation in three to five years. The skeptics' response was equally blunt: the stock hasn't seen 30 euros since April 2010, and Chinese steel isn't waiting for tariffs. The fact that the company has fallen an additional 12% since the tariff news itself says almost everything.

The Macro Data That Didn't Align

While the index was rising, the backdrop was less friendly. In the United States, stock buybacks reached 46 billion dollars per month, a volume that supported the market more through cheap money than through profits. The earnings per share estimate for the first quarter of 2015 was at its lowest level since 2006. And the percentage of bears had plummeted to 14%, a classic sign of complacency.

A date loomed on the horizon: June 17, the Federal Reserve meeting. In Europe, liquidity was parked in sovereign bonds with yields that seemed like a joke, and some forum users warned that this was a debt bubble waiting for its moment. Optimism was real. The reasons for it, more debatable.

The Recommendations and Their Bill

In the chapter of specific bets, the comparison was ruthless. Three names that had been highlighted months earlier closed the quarter like this:

• Santander: +0.61%
• Iberdrola: +7.65%
• Ferrovial: +21.74%

The conclusion many drew: when the index rises, even the biggest fool wins, and the biggest fool sometimes wins more. Other stocks in the usual selection, like Sacyr, moved around the 3.90 euro mark. Nothing required being a genius. It was almost enough to be invested.

The quarter closed with those anticipating a sharp fall and a 'cleansing of the lows,' and with those announcing that the good times were coming. The former insisted on not letting go of their shorts; the latter, that the market had not said its last word. At the close of this discussion, the IBEX had not yet decided who was right. Nor had anyone gone broke waiting to find out. That, with leverage, is a luxury.