CAC 40: Japanese candlesticks, after the evening star, the three black crows?

(News Bulletin 247) – Close to a steep downward slant, the CAC for the second time in a row this week closed at session lows, confirming the predictive nature of the combination of evening star candles (see below ). For the time being, operators are awaiting the next signs enabling them to gauge the forthcoming offensive character of the major central banks on both sides of the Atlantic.

Regarding the Fed, the ISM manufacturing index, which came out above expectations yesterday, will have comforted investors in the scenario of a very tight monetary turn. They will have more elements of work on this second part of the week with benchmarks on the tensions on the job market (ADP survey this Thursday, NFP report tomorrow).

The CAC 40 closed Wednesday’s session down 0.77% to 6,418 points, weighed down by securities that had greatly amplified their gains at the end of last week, like Eurofins Scient. (-1.87% to 85.20 euros), L’Oréal (-2.01% to 321.95 euros), Teleperformance (-2.27% to 301.70 euros), or Total Energies (-2. 64% to 54.12 euros).

Statistically, there were no surprises to report yesterday morning concerning the final data for the industrial PMI in the Euro Zone, very close to the first estimate, at 4.6 points above the 50-point mark, which, as a reminder, separates a contraction expansion of the sector in question.

On the other side of the Atlantic, the main equity indices closed in the red, like the Dow Jones (-0.54% to 32,813 points), or the Nasdaq Composite (-0.72% at 11,994 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.75% to 4,101 points.

A point on the other risky asset classes: around 08:00 this morning on the foreign exchange market, the single currency was trading at a level close to $1.0660. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $113.00.

To follow as a priority, on the agenda this Thursday, the producer price index in the Euro Zone at 11:00 a.m. and for the United States: the survey of the private firm in HR ADP at 2:15 p.m., new registrations for unemployment benefits at 2:30 p.m. and crude inventories at 5:00 p.m.

KEY GRAPHIC ELEMENTS

The major test that we mentioned at the end of last week, namely the confrontation of prices with a bearish slant, is still not finished, in the sense that we do not yet have confirmation, either of a pullback, or of reintegration. Today’s session will be instructive in this regard. The combination of evening star candles, however, invites you to be on your guard. If it were to be combined with a combination of three black crows, whose May 31st candle would be common to both figures, the bearish message would be fully reinforced.

FORECAST

In view of the key graphic factors that we have mentioned, our opinion is negative on the CAC 40 index in the short term.

This bearish scenario is valid as long as the CAC 40 index is trading below the resistance at 6660.00 points.

Hourly data chart

Chart in daily data

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