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Banking plays with fire: Santander, BBVA and the European banking sector, under examination


The last week of July has hit the market, or rather our Ibex. Meanwhile our European neighbors continue to hold the rate, not far from the highs that were reached a couple of weeks ago.

Technical analysis

The Ibex continues to leak from all sides. And it is that one of the other two great engines of our selective, the banks, do not raise their heads. Inditex does not manage to straighten the course and Telefónica does not know how to do anything other than fall and fall. Let's say the only ones trying to pull the car are the ‘utilities’, with Iberdrola and Endesa at the head. But miracles cannot do. Hence the huge gap between our Ibex and the rest of our European neighbors. And better not to speak if we compare ourselves with Wall Street. Although, on the other hand, this is something that, as we have commented on many occasions, comes from very far away.

In reality, one is already more than cured of horror and we know what there is. And the worst thing is that it will not get better. Hence the reason why I insist so much that We must go to the market to buy strength, not weakness. And this is, above all, in the Dax and on Wall Street. In fact, our selective is at more than 40% of the annual highs (10,100), while the S&P 500 does it at only 2% of the homologous levels and the Dax at less than 10%. Control references that, in addition, both in the Dax and the S&P 500 are also historical.

Next, we analyze the chart of the following underlying:


The titles of the first bank of our country are playing with fire. Why? Because there are several occasions in which the title is testing the important support zone at 1.77 euros: the lows of May and 2009. It recently marked (intraday) a new annual low at 1.7664 but closed above. That is, money is currently entering around said control zone. From which it can be deduced that, a weekly close well below this support, would be another clear and worrying sign of weakness. Prelude to what will probably end up being a return to the minimum of 2002, at 1.50 euros.

Long-term Santander monthly chart


The renewed weakness of the banking sector, as well as the new lows of the Turkish lira have led BBVA securities to clearly drill the important support area that it presented at 2.95-2.96 euros, now resistance. In fact, the rebound of the last few days has stayed well below the new resistance zone of 2.95 euros (throw back), which is a sign of additional weakness to be taken into account. What is clear is that we have an important support zone in the price range between 2.40-2.45 euros. Or rather, it is key that said support zone is respected at all times, since the following would be a movement towards the 2009 lows, at 2.33 euros.

Until just a few sessions ago we could say that the Basque entity was holding up the type better than the Cantabrian. But the deterioration in the graph of BBVA stocks is accelerating by the day. The drilling of the 2009 lows would be a very strong sign of weakness, as there are not really support references to much lower price levels. Unthinkable references at this market moment.

BBVA daily chart


The European banking index has recently pierced the support it had at 60 points, so that we have decreasing highs and lows again Short-term. And so it does not go up. Despite the fact that this index has rebounded almost 50% from the annual and historical lows of May (48.15), everything still fits within what is a simple rebound and little else. A bounce that has braked at the 38.2% tightening / retracement level of the entire previous decline. A 50% setback would take him to the 75 point area. However, this index is currently trading at 20% of the annual minimum, while some of the banks in our country have returned to the origin of the movement or are close to them. Curiously, it is the large banks (Santander and BBVA) that have been showing the weakest in recent weeks.

EURO STOXX Banks daily chart

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