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The CAC 40 managed to stay in the green in extremis on Wednesday, after a session saved by Kering. The symbolic close in the green also owes a lot to confirmation of a very marked slowdown in inflation across the Channel. The flagship Parisian index gleaned 0.11% to 7,326 points, after making contact with the upper part of a diamond figure (flattened diamond), which remains fully relevant.

Kering rose strongly (+7.4%), the market welcoming the reorganization of the group and the departure of the CEO of Gucci, which should help give new impetus to the company. In addition, according to information reported in the afternoon by Bloomberg, which cites sources familiar with the matter, the activist fund Bluebell Capital would have entered the capital of the company. The agency explains that the fund would require improvements in the level of Gucci’s activity and would have praised the merits of a rapprochement with the Swiss Richemont.

The market appreciated the fall in inflation in the United Kingdom, which decelerated to 7.9% year on year in June against 8.7% in May according to data from the British Office for National Statistics. The enthusiasm of investors is palpable given the performance of the London Stock Exchange where the FTSE 100 gained 1.9%.

For the Euro Zone, stakeholders did not have to deal with any major surprises with the publication of the final consumer price index data for the month of June, an annualized increase of 5.5% in core data, i.e. stripped of food, energy, alcohol and tobacco.

The good resistance to profit taking, at this stage, can also be explained by comments made earlier in the week by Klaas Knot, President of the Bank of the Netherlands and member of the Governing Council of the ECB, who said on Tuesday that rate hikes after July were not “a certainty” but “at most a possibility”. These comments give investors hope that the ECB’s monetary tightening policy is coming to an end. What feed a little more the optimism of investors on the orientation of the monetary policy of the European institution. Especially since M Knot is not known to be particularly “dove”…

On the other side of the Atlantic, the main equity indices managed to hold on to meager gains yesterday, after a nice bull run. The Dow Jones gained 0.31% to 35,061 points while the Nasdaq Composite ended on a flat note (+0.03% to 14,358 points). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.24% to 4,565 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 $1.1210. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $75.30.

On the agenda this Thursday, to follow in priority the weekly registrations for unemployment benefits across the Atlantic as well as the Philly Fed manufacturing index at 2:30 p.m.

KEY GRAPHIC ELEMENTS

We are at the heart – that is to say in its broadest phase – of a diamond figure. As a reminder, this is a figure close to a rhombus. Graphically, the diamond looks like a more or less flattened diamond: at the start of the pattern’s formation, prices move inside a widening wedge, then, halfway through, they oscillate at inside a tapering triangle.

The intense volatility on Thursday 06/07 accredits this thesis, as does the rebound over the whole of the past week, at this stage. We are approaching a level close to the upper part of this diamond, with the formation of a significant upper wick on Thursday’s candle 07/13. More than ever, a contrarian attitude to any work on the index is key.

The exit direction of the diamond will be decisive. We are leaning towards a bottom exit. Volumes, volatility and above all a sectoral federation will fully confirm this.

FORECAST

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

We will take care to note that a crossing of 7410.00 points would revive the tension in the purchase. While a break of 7084.00 points would relaunch the selling pressure.

The News Bulletin 247 board

CAC 40
Neutral
Resistance(s):
7410.00 / 7500.00
Medium(s):
7084.00 / 7015.00 / 6885.00

Hourly data chart

Graphic made from the software Prorealtime

Chart in daily data

CAC 40: A flat diamond-shaped graphic model (©ProRealTime.com)
Graphic made from the software Prorealtime

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