The Ftse Mib had a nightmare session, sliding violently below 19,000 points. How to read this movement and what implications does it have?
As already mentioned recently in other interviews, the current ones are markets unrelated to the economic situation that is moving in another direction.
Whenever someone tries to bring the situation back to earth, the markets stop and wonder about their movements.
The last to do this was Fed President Jerome Powell yesterday, who in the press conference yesterday evening led everyone to reflect on the general state.
Equity markets reacted to his words and continue to do so with greater decision today, with strong sales on both EU stock exchanges and Wall Street.
The market is now experiencing a correction and the question is: when will it end?
If we look at the fundamental analysis we can say that the correction has not moved the fork between real economy and finance much further.
So if I look at it from this point of view we can say that there is still a long way to go downwards for the stock exchanges.
Speaking of the Ftse Mib, I would like to point out that we are approximately 5,000 points away from the minimums and maximums of this year.
When the index was 20,500 points in the past few days, it was at 6,500 points from the lows and 4,500 points from the highs.
In the real economy we are closer to the lows than the highs and this explains well the distance that exists with finance.
If we look at the situation from a graphical point of view, the recovery was so vertical that now the Ftse Mib does not find supports before the 18,000 area.
In practice, the index could drop towards 18.300 / 18.000 points, where to find a valid support from which you can try a recovery.
It is possible that the Ftse Mib will drop to this threshold if the downward movement continues rapidly as in the last few hours.
On the contrary, if the index moves more slowly, with a slowdown in the downturn brought about by acquisitions which progressively contrast with the bearish forces, then the Ftse Mib could also reverse earlier.
I invite anyone who reads me to take this measure: given the very particular context of the markets, one must be very careful and act with the utmost prudence.
In other words, I would not buy just because the Ftse Mib arrives on the support indicated above, because I would like to see it land in that area of 18.300 / 18.000 and give a signal of strength.
I could therefore buy maybe on the 18.700 points only after the 18.000 area test and therefore after there will have been a reaction.
On which stocks would you place these future purchases?
From a brief analysis of the market, we note that bankers are weaker than the market, as are some stocks in the energy sector.
Some issues such as Enel, Mediobanca, Nexi and STM to name a few have driven the rise in Piazza Affari in recent weeks.
These are titles that still seem to have stories to tell, starting from Enel which has yet to leave the congestion point that the Ftse Mib with today has skipped over.
The stock today violated support at € 7.35 and confirmation of this break will force attention to be shifted to the next support at € 6.6 / 6.5, as there is no intermediate one.
Nexi has seen a deterioration of the graphic picture, but every time the title reaches between 14 and 13 euros it offers in my opinion new entry opportunities.
STM could still drop slightly below 22 euros before starting a recovery.
For Mediobanca I point out support in the area between 5.9 and 5.7 euros, but already around 6.3 euros it could find first support.
Wouldn’t you look at other stocks among bankers?
I would like to remind you that recently the strongest banker was Unicredit which now has the first noteworthy support in the 7.5 euro area.
So far the title may go down, but I do not exclude that we can witness an attempt to react already in the 7.8 euro area.
FCA crashed at full speed in the 8 euro area. What is your view on this title now?
For FCA I point out a trendline that allows to identify a support in the area between 8 and 7.7 euros.
The security is now close to this price range and on its keeping it will be able to start a recovery, otherwise it will be destined to drop further towards the 7 / 6.8 euro.