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The CAC 40 is in a perilous position in the lower and final part of a flattened rhombus (diamond) chartist pattern that has prevailed since the end of May. We recall at this stage that the exit direction of this pattern will give a directional for the months to come. Yesterday the index ended the session on a slack note, far from its session highs, still under pressure from long rates, against a background of now chronic firmness in crude prices.
So certainly the CME’s FedWatch tool makes it possible to estimate at 91% the probabilities of a status quo on federal rates (Fed Funds), in a range between 5.25 and 5.50%, for the September FOMC. This is not necessarily good news in itself for the equity markets, as the duration of maintaining rates at these levels is far from easy to estimate. The motto “Higher for longer” would then become “High for Longer”…
In terms of statistics, weekly registrations for unemployment benefits contracted to 216,000, far below expectations, and close to the level of 200,000 which was very often observed during the post-Covid recovery period. In the euro zone, the gross domestic product (GDP) was revised downwards in the second quarter, to 0.1% against 0.3% previously. In China, the contraction of exports in August for the fourth consecutive month, is part of a long series of bad economic indicators for the second world economy. “We think the economy will enter a recession in the second half,” asserts Capital Economics.
On the stock side, Scor gained 4.67%, with the warm welcome of its new Scor “Forward 2026” strategic plan. Tech suffered in the wake of the Nasdaq. On the CAC 40, the largest declines were recorded by STMicroelectronics (-4.1%) and Worldline (-3.5%). Cap Gemini lost 1.32%.
ArcelorMittal lost 2.6%, penalized by an agreement between the European Union and the United States on new customs duties targeting steel imports from China, according to the Bloomberg agency.
On the other side of the Atlantic, the main equity indices ended Thursday’s session in scattered order, with the Dow Jones climbing 0.17% to 34,500 points and the Nasdaq Composite dropping 0.89% to 13,748 points. . The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.32% to 4,451 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 $1.0725. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $86.00.
On the agenda this Friday, to follow in priority French industrial production at 8:45 a.m., and consumer credit in the United States at 9:00 p.m.
KEY GRAPHIC ELEMENTS
From August 10 to 18, the flagship tricolor index melted from one terminal to the other of the vast flattened rhombus (diamond) which has concentrated its nervous oscillations since May 24, breaking the line of neckline of a bearish chart pattern at 7,250 points.
A continuation of the oscillations within the diamond is envisaged. Any exit from the latter will give a direction provided that volumes, and a sectoral federation, are there…
Signs of fatigue within this diamond are already noticeable. The bearish engulfing of August 24, with an aftershock on September 04, at the level of the middle line of the diamond, constitutes one of them. Another is the weekly candle pattern for the week ending September 1st. Failure against the upper limit of the large diamond is validated.
To sum up, it is the exit direction of this congestion figure which will be fundamental, and will finally give a lasting direction.
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 7398.00 points.
The News Bulletin 247 board
Hourly data chart
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