What securities to buy and at what price to take advantage of the “Christmas Rally”

This Friday, stock markets in Europe and the United States saw the end of one of the most turbulent weeks in geostrategic and political issues following the North American presidential election and the Federal Reserve’s monetary policy meeting that ended on Thursday. with lower interest rates, etc. 25 basis pointsto the level of 4.50%-4.75%, which is already its second fall in this cycle.

And the consequences for stock markets, although varied depending on the geographical region, were not long in coming. While in Europe the major indices confirmed a fall below their early supports and are now wary of a return to September lows, in the US, North American small and mid-caps have caught up with the rest of the country’s major indices and now the top four indices are the Nasdaq, Dow Jones, S&P 500 and Russell 2000 – already trading above 2021 highs.

“Once this goal is achieved, it is the right time to take partial profits.especially in those companies that have experienced vertical growth in recent weeks,” explains Joan Cabrero, a technical analyst and market strategist, who says that, in his opinion, “the year can be considered almost over.”

Not surprising if you consider that The S&P 500 has set all-time highs up to 13 times this year, and the Russell 2000 has also done so a similar number of times..

It is also advisable to reduce participation in the European stock market, although for different reasons. In this case, it is linked to the threat of a “broader consolidation phase” that would take stock markets to September lows or even, in the case of the Ibex 35, a return to 10,900/11,000 in a worst-case scenario.

“Accordion Technique”

The idea behind this reduction in exposure is nothing more than to provide the necessary ammunition so that when the time comes to increase it again, have enough liquidity to afford “Christmas gifts” what the market offers.

“As long as these September lows hold, the decline could be viewed as a simple panic that would push the indices 10% off their most recent peak, presenting an excellent medium-term buying opportunity with a much more attractive risk/return equation than the current one,” Cabrero says, calling ten Spanish companies that will be more technically attractive if the market decline is confirmed.

“I recommend waiting for indices to approach September lows before making new purchases, especially if key supports such as 11,560–11,600 points on Ibex 35 or 2180 in this Russell 2000. In this case, the appropriate strategy would be to apply the “accordion” technique: to reduce the risk in the stock market a little in order to accumulate liquidity, which will allow them to take advantage of the buying opportunities that the market may offer in the coming weeks,” explains the expert, who hints at a boom Black Friday and Christmas, which in recent years have made it easier to see Christmas rally in the markets, also known as New Year’s meeting or Santa Claus meeting.

We shouldn’t forget this December has been bullish for the Ibex 35 in 20 of the last 30 years. This figure is even higher if we are talking about the S&P 500 index, where the number of times the last month of the year falls in bullfight.

Now, if the indices were to lose their August lows – where the red line is that says stock markets should not give up under any circumstances – then we would be talking about something more serious, about the timing of the winter quarters, assuming we faced a more complex scenario.

Whether these levels are reached or not will largely depend on the market’s reaction in the coming weeks to the election of Donald Trump as US President. “While it is often said that the impact of political events on markets is temporary, it would be unrealistic to apply this idea to the current situation since the results of this election carry significant weight, especially on the US economy and its international relations. markets,” warns Hans-Jörg Naumer of Allianz Global Investors.

The structure says that information on issues related to economic policy in some parts of the world is becoming increasingly uncertain. At least, this is what the Economic Policy Uncertainty (EPU) Index suggests. This indicator reflects media coverage of economic and political issues that create uncertainty and currently shows a neutral level in the United States. However, global reporting, particularly in Europe, tends to highlight economic risks, with particular emphasis on Germany.

In this sense, the collapse of Germany’s electoral coalition after Olaf Scholz fired his Liberal finance minister Christian Lindner led the country to a possible electoral advance in the first quarter of 2025, as did the weakness of the economic crisis. What the German locomotive is experiencing has once again drawn attention to the state of production in Germany.

“GDP is likely to remain flat throughout the year, as the International Monetary Fund (IMF) forecast in its latest forecast, after contracting 0.3% in 2023. This highlights the structural weaknesses of the German economy, such as high energy levels. costs, increasing competition from China and labor shortages,” forecast market sources, highlighting the downturn that German manufacturing is experiencing.

“Germany needs a stable, reform-oriented government to respond to the impact of possible policy changes by the new US President-elect Donald Trump, which will affect German trade, tax and defense policies“Explains Eiko Siewert, public sector and sovereign sector analyst at Scope Ratings. “Some of the negative consequences of a second Trump presidency are likely to occur at the start of his term in January 2025. measures could exacerbate its ongoing structural vulnerabilities,” he adds.

Iberdrola

If there is a fall like the one we saw in January and February, when Iberdrola rose from 11.7 to 10.1 euros, I would prefer to buy with my eyes closed to catch the bullish trend. This will happen in 12.3-12.5.

BBVA

The clearest window to buy BBVA will be if it breaks through the €9.67 resistance, but if the Ibex 35 reaches 10,900/11,130 points it is likely they could buy around 8.50. I doubt I’ll lose 8.20.

Enagas

The Enagas price curve has been moving sideways for ten years between the support zone of 11.50-12 euros and the resistance zone of 11.50-12 euros. 17 euros. If we’re lucky enough to hit the bottom of this side, buy without hesitation.

Bankinter

Bankinter presents two very interesting shopping centers. Closer e.g. 7.20-7.30 euroswhich will fit Ibex at 10,900/11,130 and another, more distant one, at 6.65what would happen to Ibex at 10,300.

Santander Bank

Santander’s idea is to buy as soon as the Ibex 35 reaches the 10,900/11,130 support zone, aiming for a rally from there that will force the bank to attack its historical resistance zone 5 euros.

Ferrovial

Ferrovial has already reached the level that would have been a priori recommended to buy a few weeks ago, at 35.50 euros. Given the likelihood that Ibex 35 may continue to lose ground, I would wait to buy 34 euros.

Repsol

Volume of the city’s territory 11-11.20 euros this would mark a 38.2% Fibonacci retracement of the entire previous rally that took Repsol from 4 to 10. 15.70 eurossy, this is also the basis of the channel. I’m looking to buy there 16.

Inditex

Inditex’s loss of €52 confirmed a small bearish reversal pattern, which raises the possibility that the company could seek support at €50 before resuming gains. IN 50 euros I’d be in favor of buying it.

Sakir

The key support that Sacyr cannot lose if it wants to continue supporting the medium-term uptrend is located in the area 2.80-2.87 euros. If the price of Sacyr falls to this support, you will be able to buy with a stop of 2.80.

Cie Automotive Company

In the case of CIE Automotive, the critical support it must not lose to continue its upward trend is in 22.90-23 euros. If the current decline is looking for support at this level, you can buy with a stop at this level. 22.90 euros.