CAC 40: Rupture of bevel against a background of tension

(News Bulletin 247) – Volatility was intense for the first session of the week on the Paris market, against a backdrop of geopolitical concerns over the escalation of tensions between Russia and NATO, and the potential consequences on prices energy, already at high altitude… The CAC 40 began the week with a drop of 2.27% in powerful trading volumes, 6,852 points, sinking the symbolic threshold of 7,000 points. However, the index ended a good distance from the lows of the session (6,757 points, on a zone of fragile support). Banks weighed heavily, like Crédit Agricole (-3.53% to 13.56 euros), BNP-Paribas (-4.85% to 61.75 euros), and above all Société Générale (-6, 05% to 33.795 euros).

The White House had warned last week that the Russian army is now ready to invade Ukraine at any time if President Vladimir Putin decides. Americans still residing there are therefore called upon to leave the country without delay. “If a Russian attack on Ukraine does occur, it will likely begin with aerial bombardments and missile strikes which could obviously kill civilians, regardless of their nationality. A ground invasion in the aftermath would involve the use of a massive force. With virtually no notice, communications to arrange a departure could be severed and trade routes interrupted,” said Jake Sullivan, national security adviser to President Joe Biden.

The digestion of the figures of the American inflation, stronger than anticipated, relatively easy at first, becomes a little more problematic as concerns grow on the geopolitical front between Moscow and NATO, whose billiards bands may cause additional pressure on energy prices, as the European Union is particularly dependent on the supply of Russian natural gas.

On the other side of the Atlantic, the main equity indices also ended well below session lows on Monday, like the Dow Jones (-0.49% to 34,566 points) and the Nasdaq Composite. (stable at 13,790 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, fell slightly by 0.38% to 4,401 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 $1.1320. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $94.70.

To be followed in priority, on the agenda this Tuesday, to be followed in priority, for the Euro Zone, the ZEW index of confidence in the economy at 11:00 a.m., the 1st estimates of GDP and the trade balance at 11:00 a.m. also, and for the US, Producer Price Index and Empire State Manufacturing Index at 2:30 p.m.

KEY GRAPHIC ELEMENTS

An oblique line of support gave way on Monday under the sectorally federated assaults of the selling camp, in a very high level of participation. This release of selling energy at this stage, in a single session (24/01), constitutes a major technical fact which characterizes the hypersensitivity of a market which is increasingly and continuously questioning the levels of valuation of the shares. . The entry into the bear market is not formally characterized, but the situation calls for the greatest vigilance under this slant. She was reinstated at the very end of the week. We put her under close surveillance. In the immediate future, plotting a wedge in hourly data is not very engaging. The three-color flagship index came out on Thursday, from below, in accelerating volumes, before starting to rise again. A definitive exit from the bottom of this bevel is the preferred option. The break, on a very wide gap on Monday, is a first decisive step.

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 6884.00 points.

Hourly data chart

Chart in daily data

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