(News Bulletin 247) – The CAC 40 index (+0.93% to 6,091 points on Monday) failed to fill the remainder of the bearish gap of June 13, leaving a candle with a pronounced upper shadow, at the dawn of a “high-risk” week, in the words of Thomas Giudici, co-head of bond management at AURIS Gestion.
“In Europe, the week that is opening promises to be crucial. The ECB, which is holding its monetary policy meeting, must record its first rate hike since 2011. While this decision is widely expected, it must on the other hand convince on its an “anti-fragmentation” tool to limit rate spreads between countries in the euro zone. As if the situation were not difficult enough, this is the moment chosen by Mario Draghi, former President of the ECB in 2011 to 2019, to resign as President of the Council after the boycott of a vote of confidence by the 5 Star Movement, a member of the coalition.Already under pressure, Italy is probably preparing for a new political crisis of which it would have been fine.”
To simplify, at the end of last week and in the first part of the session yesterday, the market was satisfied, with the necessary quotation marks, with a scenario at +75 bps of Fed Funds at the end of the month, dismissing the idea raised for a while by +100 bp after the publication of annualized inflation at +9.1%. Some benchmarks on consumption (U-Mich, retail sales) have also been there. But the bottom matrix remains bearish.
On Thursday, two eminent members of the American Federal Reserve, including the president of the Saint-Louis branch, James Bullard, one of the most fervent defenders of an aggressive monetary policy, indeed campaigned for a 0.75 point increase in percentage of the policy rate.
The news will gain in intensity in the coming days with the opening of the results season in Paris. Publications from Alstom, Publicis and Thales will be on the agenda for Tuesday’s session. Monday side values, the oil were well oriented in the wake of the rebound of nearly 5% of oil prices. The visit of the American president to Saudi Arabia did not in fact allow any notable progress on a possible increase in crude oil production. Total Energies followed the same trend (+2.34% to 48.64 euros) as did TechnipEnergies (+1.15%) or Vallourec (+5%).
On the other side of the Atlantic, the main equity indices lost ground like the Dow Jones (-0.69% to 31,072 points) and the Nasdaq Composite (-0.81% to 11,360 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell 0.84% to 3,830 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 $1.0150. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $102.20.
To be followed in priority on the statistical agenda this Tuesday, the final data on inflation in the Euro Zone at 11:00 a.m., and housing starts and housing building permits in the United States at 2:30 p.m.
KEY GRAPHIC ELEMENTS
The painting (its backdrop in any case) is dark.
The sell signals have multiplied since the combination of “evening star” candles (May 27, 30 and 31). The openings successively in bearish gap of the last two sessions of week 23, then of the first session of week 24, were accompanied by a continuous mobilization of the selling side during the session and closing on the low points of the session. All in sharply rising volumes. The momentum of participation will have followed that of the clearings, even as the CAC will have re-entered the lower part at a bearish slant that retains its resistance attributes.
The technical rebound that began during the week (W25) remains anecdotal at this stage in view of the transaction volumes accompanying it and in view of the initial losses. It came to an early halt, and the resumption of selling pressures, on gaps, on breach of the symbolic threshold (6,000 points), and in high volumes, augurs a continuation of clearances.
Tuesday, July 05, the traced candle combines worrying characteristics, its structure with an elongated body without a wick, materializing a mobilization of the selling camp throughout the session, all in relatively heavy volumes, and on breaking the technical threshold.
The flagship index achieved a pullback (graphic rejection) of school on the 6,000 points. The degree of conviction in the rebound towards 6,100 points will be tested.
Negative opinion across the upcoming session.
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 6177.00 points.
Hourly data chart
Chart in daily data
©2022 News Bulletin 247
I am currently a news writer for News Bulletin247 where I mostly cover sports news. I have always been interested in writing and it is something I am very passionate about. In my spare time, I enjoy reading and spending time with my family and friends.
