IBEX September 2012: Rally to 8,160

IBEX Reaches 8,160 Points in September 2012, Half the Market Disbelieves

How does one go from discussing the IBEX at 6,000 points, with 4,000 as the target, to seeing it hit 8,160 in September 2012? With a rally that caught almost everyone off guard. In the thread's messages, the Spanish stock market is shown fluctuating between 7,400 and 7,600 points, then marking highs above 8,100 before giving back some ground to 7,700, according to a forum user. One participant estimated a 40% cut in the tourism budget between 2012 and 2013, while another linked a headline about the 2 trillion dollars in debt from the Federal Reserve. The market, too, couldn't believe it.

What Peine to the IBEX in September 2012?

The thread notes that S&P downgraded Catalonia's rating to junk status and threatened further cuts. During those days, the ECB's bond-buying plan appeared in shared links, and some forum users celebrated it as a bailout. Janus highlighted that silver was taking off and that related stocks (Coeur d'Alene, Silver Wheaton) were soaring, as were biotech and American banking stocks.

In Spain, the movement translated, according to FranR, into a very specific technical breakout. A short-term level at 7,574 triggered a shift to an upward trend with a stated target above 8,100. The main channel was set at 7,552-7,441. Below that, the second level of the roadmap pointed to 6,740-6,600. No one in their right mind then thought it would reach that high. It did.

From Enthusiasm at 7,778 to the 8,160 Level

The first hour of the key session marked, according to FranR, the upper channel level at 7,551 and 7,574 with high volume. From there, an opening that held the breakout level, marked the next step with volume, and shot up by 200 points at once. The 77xx levels were hit, and decisively. Then, a volume spike appeared at 7,778, suggesting a nearby visit, and shortly after, the round figure: 8,160.

Some celebrated with real-life earnings. One participant claimed long positions in ten IBEX indices peine at 7,555, seven in the DAX at 7,052, and four in the Italian at 15,275, all with trailing stops and all in profit: +4,100 euros in a single day. Another forum user maintained that 8,100 had been reached as an intermediate step before giving back ground to 7,700.

According to one participant, the target was between 8,200 and 8,600. "Beyond those values, the stock market is for the brave," they stated. The correction would come, according to the same message, and it remained to be seen when and by how much: it depended on the bailout, the lack of a bailout, the timing, the Dow, and a thousand other things.

The Failed Trend Reversal Trap

Here lies the heart of the matter. According to one of the thread's analyses, when a perfectly placed and developed trend reversal pattern fails after being triggered, the previous trend usually holds. It's a market trap that changes investor sentiment; despite the failure, they continue to seek the possibility offered by the pattern and give the price wings in the opposite direction. The 8,000 points weighed too heavily: a large amount of stock had been placed there before the drop to 6,000.

The diagnosis was repeated in several long and measured messages. At 6,000, people spoke of 4,000, and everything seemed dire. Now, with the price at its highs, the premium relaxed, the sentiment survey peaked, and the media recounted a dreadful spectacle every time Brussels applied pressure. The pattern also reproduced in specific stocks: Arcelor rose 5% and remained within its bearish structure; the clear resistance was at 2.04 after having flirted with 1.95.

Shorts Banned, Inverse ETFs, and Overzealous Brokers

With the regulator watching, short selling became complicated. One participant explained that they bought an inverse ETF for 50 euros and encountered a reply from another forum user: technically, entering an inverse ETF means going long; the ETF is short, not the investor. The doubt was not trivial. According to another forum user who asked their broker, they received a written response stating that funds or ETFs replicating the inverse return of an index affected by the ban were included in it and did not allow creating or increasing a short position. Another entity responded the exact opposite: it doesn't matter what the ETF does internally, you are going long.

The thread also discussed a very different commission ecosystem depending on the entity: high commissions at one bank, slightly lower at another, and the cheapest at a third for smaller trades. All this while a CNMV circular, recalled from memory by a forum user, left room for interpretation. When the supervisor writes ambiguously, brokers act as notaries.

El Popular and the Capital Increase Issue

In the latest messages, a notice appeared: an extraordinary meeting of Banco Popular to discuss a capital increase. Janus argued that if even one bank not flagged by Oliver Wyman as needing capital decided to raise capital, it would open a huge can of worms. The logic circulating in their message: entities not obliged to strengthen themselves would be at a disadvantage compared to those that did raise capital, as the latter would have resources available while waiting for an adverse scenario. They mentioned Bankinter as an example.

Those Who Sold Just Before and Those Who Stood By

Not everyone won. A recurring case in the material: years holding positions, selling, and right then, the rally. Another profile lamented having clearly seen an entry opportunity in Mapfre at 1.5 euros and not taking the plunge. A third warned that seeing the IBEX at 8,100 meant few opportunities remained: the higher the companies, the greater the implicit risk. One forum user summarized: everyone was taking advantage of the rise, but the underlying reading remained that this was an adjustment within a larger decline. "Next year they will all fall, it will be horrible," they added.

Cuts, Budgets, and "We're Better Off Than Last Year"

On the macro level, the fine print hurt. One forum user estimated a 40% drop in the tourism budget between 2012 and 2013. The thread commented that the government's press conference repeatedly stated that these measures fully complied with recommendations. Rajoy uttered, "I believe we are better off than last year," which was met with more sarcasm than conviction. And on the street, a participant described a protest against cuts in Granada with at most two hundred people, carrying slogans aimed at Emilio Botín that they considered misguided.

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The lingering question is the usual one: if the IBEX was rising, the bailout was receding, the budget was being cut, and tourism was losing 40% of its budget, who was right, the market or the country's balance sheet? To this day, with the level at 8,160, the answer is that the market collected first. The bill, well, that would be seen later.