Spain's IBEX crashes from 14,400 to test 8,500 floor

IBEX loses 14,400 and seeks floor between 8,500 and 12,000

The IBEX surpassed 14,400 points with the daily MACD showing a buy signal, eyeing major resistance at 14,590-14,600. Shortly after, the same index lost 13,000, shedding more than 61.8% of the gains accumulated since the 2002 lows. Between the technical euphoria at 14,400 and the 8,500 floor lay a tracking of levels that marked each support as it broke, in a plunge the analyst himself admitted he did not expect to be so vertical.

Starting point: an uptrend channel and a buy signal

The analysis began with a constructive scenario. Having broken the 14,380-14,400 resistance, the IBEX faced 14,590-14,600, and the daily MACD confirmed a buy signal. A short-term uptrend channel had its base at 14,150 points, a guideline acting as the first line of defense.

Burney, in fact, warned then that he would not enter the stock market.

The cascade of supports: from 13,500 to 9,400

The crash was measured level by level. The channel support failed; then came 14,000 and 13,840, the previous low. When the IBEX lost 13,500, the next cushion was 13,000, which was no ordinary number: it coincided with the year 2000 high. With volatility spiking, any idea of a floor was replaced by a humbler one: potential zones for bounce initiation.

The decisive reference arrived with the Fibonacci retracement. 9,400 points marked the 61.8% of the entire rally from the 2002 lows, and losing them was read as a warning to postpone any entry until the 8,000 zone. The IBEX ignored this: it touched 8,500, a zone that also acted as support, and earlier had rested on the lower guideline of a downtrend channel, which served as a springboard for a significant rebound. 10,620, the 50% correction, remained the boundary between a correction and something much worse.

Why did almost no one dare to go short?

The paradox of the bearish leg was, according to Burney, that with indices in freefall few bet against the market. His reason: being so low, and with rumors of new rate cuts by central banks, it was difficult to go short. Actual trading relied on Santander futures. Contracts were sold in the €13.05 zone, interpreted as a pullback to an old support, and a break below €12.95 was awaited to add more.

In the Nasdaq Composite, the fall found buyers exactly at the 61.8% Fibonacci level. That is where the manual ended. Santander's bearish pressure aligned with its €12.30 support, BBVA's €14.10, and Telefónica's €21.00, the three large caps marking the index's floor.

Warrants, AMD, and the fine print of leveraged products

A forum user bought an IBEX warrant with a strike of 12,500 that yielded a 30% profit in a single session, and the response was the classic warning: they are ticking time bombs. Expiration, time value, and volatility influence their price, and with the market so nervous, volatility was sky-high, so the party could end at any moment.

The most aggressive trading occurred in US tech stocks. AMD was bought at [$]4.04[/B] after attempting to enter lower seeking a downward whip; it was sold at $4.31 and bought back at $3.76. Bullish divergence in the daily MACD and RSI, and also in weekly indicators, supported the bet, but even that guarantees nothing when the Nasdaq decides to keep falling.

Panic volumes: Telefónica and Santander

Trading data from one of the highest-tension sessions shows very high figures. Telefónica moved 886,562,016 shares in a day; Santander, 731,439,842; Repsol, 344,438,834; Iberdrola, 284,660,641, and BBVA, 101,103,766. A forum user wondered if this wasn't excessive and noted that selling continued.

That day there was also a calendar detail many overlook: the quarterly expiration of futures and options, known as triple witching hour, often coincides with short-term floors or ceilings. It is not magic, it is contract mechanics.

With the IBEX bouncing from 8,500 and the Nasdaq approaching a long-term uptrend guideline, the question is not whether there was a floor, but how many held inside to verify it. The levels were written. The steady hand, was not.