Exuberance Exits As Spain's IBEX Hits 200DMA

In a normal market, whatever that is, we would not feel the need to note every tick in the Spanish equity market; but today's 2% decline - its worst in 3 weeks - is the first down-day in 10 days. IBEX, the Spanish equity market index, rallied over 29% from it's lows on 7/23 (following a decent leg down after the EU-Summit disappointment) only to perfectly reach its Maginot Line at the 200DMA on Friday and this morning. The volatility regime is very reminiscent of last year with the binary (chaos or serenity) scenarios the only ones left for most market participants and with a short-selling ban doing nothing but exaggerating the whipsaws, we wonder if the IBEX is due to revert back further - more in line with its sovereign credit moves on Draghi's 'believe-me!' speech. Perhaps the realization that another rumor (rate-caps) has come and gone has broken the cycle of faith...

 

IBEX performance has been dramatic...

 

and notably more so than in Spain's sovereign bonds - which implicitly is the fulcrum security that should be driving the performance...

 

Charts: Bloomberg