The proximity of the stock markets in Europe to one of the most ambitious objectives that had been set so far -the maximums of 2007- makes it necessary to calibrate their possibilities for the next few years, and these go through increases of between 20% and one 30% that would return them to levels not seen since before another of the great market crises, that of the bursting of the technology bubble.
The rally that the bags have experienced in the last year have led them in many cases to recover from the Covid . The growth hypothesis that was outlined at the beginning of April by Ecotrader – elEconomista’s investment strategies portal – for the EuroStoxx 50 has gradually taken shape over the sessions.
After the renewal in the last weeks of the highs of the year, the impeccable upward trend developed by the main European benchmark in recent months has been reinforced , and the objectives that were then set for the index at the highs where it traded before bankruptcy Lehman Brothers (in a graph without the discounted dividend effect), are getting closer and closer.
In fact, the selective has sibyly approached those objectives set at 4,572 points and more and more voices are beginning to question what the next step in the markets will be if optimism is maintained in the trading floors that this week has ratified the Federal Open Markets Committee of the Federal Reserve (FOMC) by following the established roadmap and cutting by 15,000 million dollars a month the amount of assets that the US central bank currently gobbles up.
One of the most plausible possibilities that is considered from the premium portal of investment strategies of elEconomista if the EuroStoxx 50 ends up exceeding the highs of 2007 is to think about a return to the highs of the dot- com bubble . “It would be one of the objectives to manage, yes,” confesses Joan Cabrero, technical analyst and strategist at Ecotrader, who figures the level to monitor at 5,500 points.
The ‘Nokia effect’
This is a benchmark that is more than 25% away from the levels at which the EuroStoxx would end if it returns to pre-Lehman levels. However, do not throw the bells on the fly. Several factors must be taken into account, such as the dividend discount in the index or the high weight that some technology companies had at that time, such as Nokia, which weighed more in the selective much more than it did. does now.
In fact, just as an example, the weight of the Finnish technology company in the MSCI Euro Index, which brings together more than a hundred large-cap companies in the 10 developed market countries of the EU, came to around 6 % at the beginning of the years 2000. A figure that contrasts with the 0.6% that weights in that same selective at present, about ten times less.
“It is essential that the German Dax exceed 16,030 points”
Despite these prerogatives, targets at 25-30% distance are not unreasonable if one takes into account that other selective Europeans that do not face these problems, as is the case of the Dax 40 in Germany. The selective German, which is a selective of the so-called total return (which does account for the distribution of dividends), entered this Friday in an absolute free rise, which is the most bullish technical situation there is and would give credibility to a trend that the EuroStoxx is one step away from ratifying.
“In order for us to have new bullish technical evidence that supports a context of bullish continuity in the European stock markets, it is essential that the German Dax exceed 16,030 points, which are its highs for the year and historical,” says Cabrero. And in the case of Cac 40, the situation is similar as the index has exceeded the highs of the year 2000 by 6,944 points.
The Ibex looks to the highs of 2015
In the case of the Spanish selective, and after having exceeded 9,000 / 9,055 points this week, the consolidation phase developed by the Spanish selective since mid-August can now be concluded and proposes the resumption of its main upward trend.
“An end-of-the-year rally to targets at 10,100 points, which is where the Ibex 35 was trading before the Covid crash , gained many integers after exceeding 9,055 points, but it would be optimal if it found support in the rest of the European stock markets to fully trust in this scenario “, adds Cabrero, who assures that the short-term falls seen this week have signs of having been what in technical analysis is known as a throw back to test again the old resistance zone, now support , out of 9,000 / 9,055 points.
Of course, after this break “it is most likely that the increases will continue towards the objectives indicated and that once achieved we can begin to look at the highs of 2015 and 2010”, he clarifies. We are talking about levels such as 11,880 and 12,250 points , which are (as in the case of EuroStoxx) at a distance close to 20% from 10,100 points.