Spanish stock indices compressed yesterday. The main Spanish index that we follow is the Dow version but here we show the Ibex itself. Both Indices have compressed and a break of yesterday’s range would signal that a new trend has probably started.
There is scope for re-compressions and occasional false breaks, so we prefer to use compression signals in combination with other information. Today is the first day of the expected cluster of equity index turns and the combination of a turn and a compression has the effect of ‘turbo charging’ that compression, so a break downward of yesterday’s Ibex cash price low of 8327 would indicate that a new down move has begun, which could be violent.
We already have an outstanding short-sale recommendation in Spanish stocks from Friday March 15th - about 3% above current levels as I write. This new compression also means that a protective buy stop can be placed above yesterday’s cash market high of 8494. This is a useful way of using compressions, as a trade and risk management tool.