Editor’s note: This article was first published in March 2011. The market commentary is from 23 March 2011, including Gamesa above 6.88 euros, Inditex at 57.02 euros and the expected Portuguese bailout; Portugal requested EU/IMF assistance in April 2011. Inditex split its shares 5-for-1 in 2014, and Gamesa later became Siemens Gamesa.
As we said before, in 2011 the stock market is going to reward intelligence and plenty of common sense more than technical analysis, which, we would point out, has failed yet again. Gamesa broke through its resistance level, climbing above €6.88 a share, and Inditex took just five days to break the supposed €55 resistance, so right now, at 4:40 p.m. this Wednesday, Inditex is trading at €57.02.
As for the stocks that expert analysts swore would rise 30%, the truth is that they show little sign of following that trend.
According to the news we expect in the coming days, however, this upward trend could stop when we least expect it, so now is the time to regain positions and get your strategy for buying into a stock clear again.
News of a possible bailout for Portugal will soon weigh on the Spanish stock market, as investors fear Spain could be next. In my humble opinion, Portugal is in its final throes, trying to avoid what will end up being an imminent financial rescue.
The stock market does not move according to a perfect algorithm; the psychology of the people who invest in it plays a big part. So we can expect the IBEX (Spain’s benchmark index) to turn red again within days, which is why we once more recommend that fundamental principle of investing in shares: “Be patient until you can clearly see the wave you are going to catch.”
Further reading
Featured image: Mark Morgan from Trinidad, CC BY 2.0, via Wikimedia Commons.
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