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The Ftse Mib experienced a very heavy session yesterday, dropping below 19,000. Is it just the beginning of a larger correction or is this movement looming as a buying opportunity?
What is taking place in Piazza Affari is the initial movement of a correction that is probably not going to upset the underlying theme which remains bullish.
I fear, however, that the corrective phase, which started from area 20,400 of Ftse Mib, may continue, also because the corrective trigger starts in perfect consistency with what is also happening on Wall Street.
Sales are generalized on the Italian market, but also on the American and German market, and I think they are going to look for cheaper price areas after the recent “exaggerations”.
Speaking specifically of Piazza Affari, I would like to emphasize that the correction has not come unexpectedly.
I went short two days ago for one simple reason: when the Ftse Mib hit the top in the 20,400 area two days ago, it closed the gap left open after the first bearish wave from coronavirus.
The price zone in question was sensitive and worked well: I personally went short with 60% of the portfolio.
Yesterday I was waiting for the test of the first dynamic support area that was violated, given that the Ftse Mib opened below it and accelerated downward.
At current levels I don’t see particularly significant support levels for the Ftse Mib, while there is a very interesting one on an old static resistance area at 18.420 points.
This level in my opinion will be a bit of an attraction for the current movement of the index which I believe can therefore continue to slide downwards.
Honestly, I hope this will happen as I have been in a short position for a few days, indicating that the 18,420 point would be a very significant target area.
Below this level we find the dynamic support that transits in the 17,800 area, but it seems a bit far to talk about it now.
I believe that the current correction of the Ftse Mib is healthy and also physiological because some values had grown too quickly in recent times.
All in all, this drop will offer investors the opportunity to buy at cheaper prices and for those who prefer two-way dynamics like myself, there is the gratification of this nice drop in the Ftse Mib that I believe can be completed in the 18,450 points area, not before.
This is the first significant technical area and personally I will take advantage of that test, if any, to close my bearish positions.
To buy then I will mean a choral movement of the markets, such as the one we are witnessing the decline at the moment.
Banco BPM was one of the worst banks today, while sales were slightly less violent on Ubi Banca. What is your view on these two bankers?
On Banco BPM my view is very negative and this is one of the titles that I shorted three days ago, so I am very satisfied that it is going down.
In the short reading key, the interpretation was identical to the one I just mentioned for the Ftse Mib.
I sold Banco BPM because with the maximum at the beginning of the week it went to close the gap-down in the 1.47 euro zone.
It seems to me a sensitive and potentially interesting area for short selling that is working well.
Banco BPM could see an extension of the corrective dynamics underway, perhaps to reach the 1.2 euro area, where the reasoning should be redone.
The stock seems to be oriented downwards, in line with the surrounding external structure and with the perfect timing given by the bearish trigger that started on closing the gap-down I mentioned earlier.
For Ubi Banca, the reasoning is identical given that even in this case there has been the closure of a gap-down, in the 3.1 euro area, from which some benefits have been taken.
The latter turned into short selling when Wall Street also started to show signs of weakening.
For Ubi Banca, the target of this descent is 2.45 / 2.44 euros, but I have not entered the short position on this security.
ENI experienced a very heavy session yesterday, returning to a step of 8.5 euros. What can you tell us about this title?
The current movement of ENI is characterized by an impressive bullish trap, because 4 days ago the title had broken up an important dynamic resistance and seemed projected towards important recovery levels.
The breakout had taken place with oil that was already well priced and now the stock is fully reflecting the breakdown of black gold in an important dynamic support area.
I went short on ENI right on the bullish trap and I believe that the title will follow the trend of oil.
At current levels I will go to cash, it being understood that ENI for now remains short, therefore it will be bought either on the weakness of the area test for 8.5 euros, or if you want to enter on strength you will have to wait for the breakout of 9.9 euros.
All that takes place within these price ranges is trading only and is not ideal for medium-long term positioning.
FCA has plunged back into the euro 8 area after the good rise achieved up to a few days ago. Is the title race over for now?
FCA is one of the stocks on which I am positioned downward at the moment and the logic with which I am entering was twofold.
First of all, when FCA reached € 9.7 it impacted the dynamic resistance that compressed its prices since the end of last year.
The stock has touched this resistance drawing a bearish divergence and at that point the short call was quite obvious.
Operationally FCA remains downward oriented and in this area I don’t see important support areas, signaling that the next one is at € 7.7, where I will take the title into consideration for bullish operations.
Telecom Italia yesterday suffered a painful lunge. Better to stay away from the title now?
Telecom Italia with the breakout of a few days in the 0.35 euro area has certainly sent an interesting long signal.
Four days ago, however, the stock showed a bearish divergence and, thanks to its structural weakness, clearly paid duty.
The chart is compromising itself very quickly and the situation will have to be re-evaluated on two price areas.
One is that of 0.337 euros and the other of 0.324 euros: when and if Telecom Italia reaches these levels, it will be appropriate to make some reasoning.
At present, obviously the stock has become as short as the rest of the basket and whoever has it in the portfolio should think of lightening to buy back at lower prices.