It appears that today's +3.5% jump in IBEX (from decade-lows) is being heralded as some kind of indication of a bottom or turning point in stress in Spain. By way of context though, Spanish 10Y bond yields remain above 6% (and spreads at 450bps near record wides), Spanish 5Y CDS are unchanged at record wides over 500bps, and the banking bailout remains woefully small relative to the size of the hole they are trying to fill (and all of that is funded by a sovereign that only retains access to the public debt markets thanks to its circular banking system's bid). To be more clear, the last time IBEX increased by +3 sigma marked the very top last July before Europe fell apart and IBEX plummeted 23% in just 2 weeks. Anchoring bias can be a dangerous thing and dead cat bounces are often misleading when selling-fatigue is all around.
A +3 sigma move off a 3-month mean was the trigger for sellling to begin last summer - will we echo?
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Chart: Bloomberg