The Spanish stock market has seen a monstrous rally over the last month, rallying close to 30% from its July 23rd intraday lows through late last week. That rally, though, was halted in its tracks when Spain's IBEX index bumped up against its 200-day moving average (DMA). Looking at a longer term chart of Spain's IBEX shows that the 200-DMA has been kryptonite for the index over the last year. The last time the index traded above the 200-DMA was back in July 2011!
Now that Spain and Europe have seen monster rallies, there has been a growing chorus of investors saying that now is the time to get back into European stocks. A more prudent strategy for investors, however, may be to wait until Spain and the rest of the major European bourses can break above resistance and trade above their 200-DMAs.
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