Short Term IBEX Forecast

Published 27th November 2017 & amended 11th December 2017

The Ibex has reached a 10-year trend line resistance in May 2017. Subsequently a complex and overlapping move to the downside occurred. We label this correction as a (W) wave into October 2017.

It is likely that the downturn in wave E° since May 2017 is complex and not complete yet. Our arguments are time, space, and wave pattern. Usually triangles tend to retrace a substantial portion of the previous countertrend move of same degree within the triangle. Moreover a 5-month E° wave looks rather short relative to the rest of the triangle.

We project in our IBEX forecast another wave down before E° and therefore the entire 10-year triangle is completed. We see support at the 9,500-9,700 area as well as wave relationships between the (W) and (Y) wave. A similar relationship can be also projected from the A and C waves of leg (W) if our black count is correct indeed.

15-minute charts cannot add conclusive information right now. The increase from November 15th to November 16th was sharp but nevertheless it counts better as a 3-wave move to the upside. Subsequent wave action was rather choppy and sideways. However, the entire structure can still morph into an impulse to the upside as we publish this.

Our best alternative case is a sizable extension within the B wave. This may as well play out around year end in a “party now worry later” rally mode. We cannot exclude this possibility right now. However, the leg down from November 16th-November 20th looks impulsive. Therefore we do favor the black count until significant evidence appears against it.

Medium Term IBEX Forecast

Published 4th October 2017 & reviewed 11th December 2017

We see the IBEX index lagging its European counterparts over a longer timeframe. A cycle degree triangle started as of late 2007, which is a few years later than the Dax for example. Therefore we see completion of the triangle pattern to be as well a few years later than the Dax.

Non-confirmation in time is a typical phenomenon that can be seen in equity markets. It has been long observed and is part of traditional Dow Theory.

We believe as of November 2017 that the IBEX is medium term not done to the downside. Lower levels above the C° wave low are likely.

Technical Analysis