Because of what is going on in the markets now that European leaders have retooled their reforms, the Ibex 35 has already surpassed the 8,700 point level. Now experts are recommending watching for the major Spanish index to reach the 9,200 point zone, which coincides with max levels seen in October.
If the excitement of the bulls were enough to break the resistance, the Spanish stock index would have the strength to reach 9,800 points, displaying a strong bullish trend.
On average, the investment shops estimate that it could rebound 16.72%. Other estimations are a more realistic 12.55%.
Stocks still look cheap
The investor who is looking for a plan to get out of the euro crisis (British betting houses are gambling three-to-one odds that the solution will falter before 2012 is up) still have opportunities to get in on the rebound, even though the Spanish index has already rebounded 12% in the last nine trading sessions due to unbridled bearish enthusiasm about the news in Europe.
Miguel Paz from Unicorp gives an explanation for how to free ourselves from the burden of an effect known as emotional anchoring: ?In our mind we underscore the fact that the Ibex has risen to an amazing 7,600 points in nine sessions, and that keeps us from seeing that the stock market could be cheaper than current prices.?
In fact, the main indicator of the Spanish stock market is priced at ten times its Price Earning Ratio (or PER), a ratio less than the five-year average of 10.82 times. The last time the price was this cheap was in 2008, when the PER was 7 times.
