Sabadell fighting downward trend channel begun on 25/01/2019
Short term perspective looks stable inside the 08/02/2019 upward channel, although surely it is going to test the lower boundary at 0.9174 either this week or next week. A big resistance is in 0.9958€ and surpassing it at least until 1.03€ would mean going to 1.11€ level in mid July 2019. On the other hand, going further below than 0.9174€ could be catastrophic for the company, going to 0.80€ and further below, at 0.70€. But if that were the case, it would be most likely to just test the low 0.8342€ already tested back on 08/02/2019. My technical strategy would be short next 2 weeks, long next 3 months if and only if SAB reaches 1.03€.
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12/06/2019: Sabadell (SAB) down -2.10% at 12h, about to test the lower boundary at 0.9174. If it goes fast, it could be this Friday. Next Wednesday June 19 Fed will be deciding whether to maintain interest rates or decrease them. Thus, if the market is still discounting it from SAB, the resistance of 0.88€ could be reached before it rallies back to 0.94€.
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SAB reaches 0.9176 after 12h. Still shorting until next Wednesday.
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SAB reaches 0.909 after 12h. ECB's decision of maintaining negative interest rates and foster QE stimulus further onwards affects european banks as a never ending story of paying to the ECB for saving their funds there. The coming weeks will be crucial to close or maintain the short position. But if you want to avoid risks, if tomorrow doesn't spike more than 2.50%, my estimate is that no later than this Freaky Friday, SAB reaches 0.8974 and then you can close your position. If tomorrow spikes more than 2.50%, close your short position because Sabadell is following the 08/02/2019 bullish channel.
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SAB closes at 0.931, 0.76% higher due to Wall Street cheering up. However, I still maintain my previous forecast. SAB is in the border line of the bearish channel.
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Today Fed maintained interest rates but now the probability of cutting rates in July increased to 100%. SAB was up 2.04% today, 46 bps away from my recommendation of closing short positions. As it was nearby this "closing position" recommendation, there must be another forecast to be done, so here it is: If tomorrow SAB is down no more than -2%, SAB is confirming the bullish trend therefore you should close your short position, otherwise maintain it until Freaky Friday. On Freaky Friday, there could be either a 3-4% increase in SAB's value or a 2-3% decrease.
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3 important news surrounding SAB makes its value tumble more than -3.79% today after 15:30h, touching the lower bullish channel boundary. SAB has decided to paralise the sell of Sabadell Asset Management (this was a very attractive point for continuing the bullish channel accounting for mabe 70% of bullish trend), the debt rates are falling in Europe and this affects all Spanish banks and finally, the Bank of England has warned about slowing-down economy although it still does not contemplate a reduction in interest rates (apart from SAB, this also affects SAN). My forecast now becomes purely bearish for SAB over the next 15 working days, when it might manage to test 0.8540€ level (or even go under until 0.8342). Hence, abandoning the 08/02/2019 bullish channel.
Comment:
SAB down -0.60% on Freaky Friday (today). Bearish outlook, abandoning bullish trend.
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SAB up 0.33% to 0.903€ after 12h. Reducing its exposure to BCE financing from €20.500M to €15.500M and reducing its exposure to IRPH in €600M (-43%) to fixed mortgage rates, makes the bank stand on 0.88-0.90€ level, not going further below from 0.88€. The situation now is fragile because any strong bad news or stock doubts about SAB would make the stock test 0.85€ level. However, it looks like the company is preparing for something big as it rejected to sell Sabadell Asset Management and other valuable assets... If it is big enough, we could see 0.95€ after its announcement and paving the path to 1€.
Trade closed: stop reached:
SAB entering back to the bullish channel is no good news for shorters and it only means what was written in the title of this analysis: Sabadell is fighting downward trend channel begun on 25/01/2019. I expect the stock to close positive compared to June 2019. Therefore, I would close the short position this week.
Comment:
*I expect the stock to close positive at the end of July compared to June 2019.
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Today SAB is down -2.70% before 12h. If tomorrow is strongly down again, we could see 0.85€ level this week. However, the fact that it touched the bullish channel's lower bound should be a warning sign for shorters. 0.85-0.86€ would be, in my opinion, the right level to close a short position. If there are bad news to SAB or banks this week, we could close short position later. If there is nothing, the position should be closed no later than this week.
Comment:
Sabadell Stock closed June at 0.9110. 2 weeks left for the end of July. At the last half hour of today's trading day it is decreasing -4.21% to 0.9196, one week before the ECB rates decision and one week before the banks start issuing their quarter results.