(News Bulletin 247) – The backdrop remains that of very strong risk aversion, in a very nervous interest rate environment, a stormy geopolitical context and with activity barometer indicators clearly suggesting the scenario of an entry into recession of the main economic poles of the planet. In the very short term, however, the buying and selling forces tend to balance each other out. The CAC 40 index managed, after spending most of the session on Wednesday in the red, to symbolically extricate itself into positive territory, for an equally symbolic closing up (+0.19% to 5,766 points) . An increase that the barometer index of the French market owes to securities with a strong current Beta effect, such as Hermès (+2.36%), Renault (+2.40%), Schneider Electric (+2.42%) and Cape Gemini (+3.88%).
An extension of this rebound is possible, but it cannot be sustainable, given the power of the initial clearances and the commitment of the selling side, visible both in the volumes of exchanges and in the sectoral federation. Once again, the comparative observation of prices and the dynamics of volumes on this technical protest movement will be essential.
If on the agenda side, yesterday’s figures came out without much relief (trade balance, current housing sales, wholesalers’ stocks), halftone and without direct impact on prices, it is because the operators have already turned their eyes to the main events of this second part of the week: PCE prices, the Fed’s flagship measure of inflation on Friday, and this Thursday the final US GDP data for the second quarter.
On the other side of the Atlantic, the main equity indices rebounded significantly on Wednesday, like the Dow Jones (+1.88% to 29,683 points) or the Nasdaq Composite (+2.05% to 11 051 dots). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 1.97% to 3,719 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 $0.9660. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $81.50.
To follow in priority on the statistical agenda this Thursday, the weekly registrations for unemployment benefits and the final data of GDP Q2 at 2:30 p.m.
KEY GRAPHIC ELEMENTS
The symbolic 6,000 points were broken under validating conditions of volume and volatility, and the new work zone identified between 5,785 and 6,000 points will have been crossed in one go last week. At this stage, the possibility of a technical reaction will take shape. We lacked the materialization of the conditions for its implementation.
We were talking Monday morning about the possibility of a harami candle or sharp bearish acceleration from the start of the session. It is actually in “inverted hammer” which comes to give us a signal of the same nature. Unfortunately it was not validated by the next candle, red and without any lower shadow. Only the ability to close above the September 26 highs would reinforce the idea of the rapid development of a technical rebound. We are not there yet.
FORECAST
In view of the key graphic factors that we have mentioned, our opinion is positive on the CAC 40 index in the short term.
This bullish scenario is valid as long as the CAC 40 index is above the support at 5640.00 points.
Hourly data chart
Chart in daily data
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