The Banco Santander (BME: SAN) stock has been in a free fall mode since February 27th, when it broke below the lower bound of the sideways range that had been containing most of the price action since July 30th. Yesterday, the stock opened with a negative gap, but hit support at 2.573 and today, it rebounded somewhat. Overall, even if the recovery continues for a while more, as long as SAN is trading below the lower end of the aforementioned range, we will maintain a bearish view.
The recovery may continue towards the psychological 3.000 zone, from where the bears may take charge again and pull the trigger for another test near yesterday’s low of 2.573. If they manage to overcome that hurdle this time around, we will see the stock trading in waters last seen back 1996. The next area to consider as a potential support is the 2.200 mark, which is near the low of December 1996.
Looking at our daily oscillators, we see that the RSI lies well within its below-30 zone, while the MACD runs well below both its zero and trigger lines. Both indicators suggest strong downside speed, but the fact that the RSI ticked up today adds to the case that some further recovery could be in the works before the next negative leg.
In order to abandon the bearish case, we would like to see a strong break above 3.520. Such a move may confirm the stock’s return within the pre-mentioned range and may initially allow advances towards the high of January 29th, at around 3.728. Another break, above 3.728, could extend the recovery towards the upper end of the range, at around 4.011.