SAN, BBVA and IBEX update

Please refer to the earlier blog of July 25th, 2012 and earlier entries for Santander etc. In it we warmly recommended the purchase of all three, SAN , BBVA and IBEX. Here is the IBEX for starters;

$ibex sept 2012

On that very day the IBEX actually traded just below the 6000 mark. Today it is at about 7500, up no less than 25%. Similar gains were had on SAN and BBVA (not shown). Even if the IBEX is not directly tradable the EWP could have been used, shown below;

ewp sept 2012

The gain here is about $6 on $20. We would sell all now in line with the adage, buy on rumour, sell on fact. In all cases either a wedge  or a simple 5 wave sequence for the last major leg can be counted. Also all seem to have completed, or nearly so, a minor 5 wave move from the lows. This could be an initial start to even higher levels but could also be a c wave ending an a-b-c rebound.

SAN , BBVA and the IBEX update

SAN Jul 25 2012BBVA jul 25 2012

IBEX jul 25 2012

Santander, Viscaya and the Madrid index are all at , close to, or even a little beyond what are “normal” reasonable targets under EW. The index could still do another 700 points or so to reach the 4th wave of previous degree but it has already lost precisely 62% of its value. Santander has maybe another 60 cents to go to get to the 02 lows, the 4th wave. Viscaya has done all that and is now pennies away from the trend line of the wedge wave c of C.

What one would expect in EW land is a turnaround somewhere here, if not for the IBEX as a whole then certainly for these two banks. To state the obvious , there is only another $4 left to the down side. Keep in mind also that Santander is the largest bank in the Eurozone and Viscaya is not that far behind. Both have extensive operations outside of Spain itself. If ever there were banks that fall into the “systemic”-risk category, it is these. Who knows, maybe just somehow they will pull another, bigger, rabbit out of the hat. If they are buys remains to be seen, time will tell etc. But in any event these banks are not good shorts.

Here they are in more detail:

san detail 2012bbva detail jul 2012

In the SAN case it is possible to draw the wedge less sharply which would change the count in such a way that we have only completed wave 3 and are now starting wave 4, that does not apply to BBVA at all. The RSI and MACD are not confirming the new lows.

STD, now SAN, Santander ADRs update

SAN

The assumption that Santander traced out a large diagonal (see previous blogs) remains plausible but there are a few caveats. The “wedge”has a failure built into it which is never a good thing. This does not show up in the more time-compressed previous chart. Fundamentally it is nice that the banks got a 100 bln. Euro support package but most estimates are for at least 350 to 400 bln in order to solve the problem. Is round two going to come with the same lenient terms? Is the subordination of other creditors going to undermine the situation? From an EW perspective we would have liked to see a drop to $4 or below. When something does not happen it is often simple delayed. After all we could be in wave 4 and 5 is still to come. Continue to hold but with a tight stop and exit at the trend-line, say at about $7.