CAC 40: Breathing lessons

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The CAC 40 index is expected to fall sharply this Friday, after Israel’s possible response with a drone attack in central Iran. The Israeli military has made no comments at this stage. The fear of a widespread conflagration in the region has weighed on the main stock markets for several weeks without yet generating any feeling of fear.

Yesterday, the flagship French index managed to gain 0.52%, with the relief of a satisfactory start to the quarterly quarters. But the prospect of having to wait many months before a significant inflection in key rates, particularly American ones, continues to generate a feeling of caution, in the background, on the Parisian market.

The yields on 10-year federal sovereign bonds rose again yesterday, close to 4.64%, following the following statistical publications: weekly registrations for unemployment benefits, at 212,000, and the manufacturing index of the Philadelphia Fed, which explodes to 15.5, will invite the Fed to take its time. Remember that retail sales, published at the start of the week well above expectations, helped to show that the return to a target inflation of 2% would not be easy.

On the value side, the CAC 40 was led by Edenred (+4.9%), which published strong growth for its first quarter, while confirming its annual objectives. Danone also pleased the market, gaining 0.9% after once again exceeding expectations for the first quarter. Excluding the CAC 40, Forvia recorded the largest increase in the SBF 120 (+7.9%), after delivering like-for-like growth that was better than expected by analysts and reassuring in the first quarter.

On the other side of the Atlantic, the main equity indices ended Thursday’s session in scattered order, like the Dow Jones (+0.06%) and the Nasdaq Composite (-0.52%). , weighted by a semiconductor sector under pressure. The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted slightly by 0.22%, to 11 points above the symbolic threshold of 5,000 points.

An update on other risky asset classes: around 8 a.m. this morning on the foreign exchange market, the single currency was trading at a level close to $1.0630. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $83.70.

On the agenda this Friday, not much to eat. Producer prices in Germany have just been published, beyond expectations on a monthly basis. Investors will also be able to follow the end of the week of IMF (International Monetary Fund) meetings.

KEY GRAPHIC ELEMENTS

Now is the time to take a breather from the lessons. The CAC index has traced, in contact with the upper Bollinger band, two candles where the low points, the opening level and the closing level merge. And this before starting a slow decline towards the lower part of an ascending channel (in black) on the daily chart. The session of Tuesday April 2, by the volumes, the length of the red body of the corresponding candle, reinforced the 8,220 points as a difficult level to cross.

Then a major technical event occurred, namely the breaking of the gap, the highly symbolic threshold of 8,000 points. The latter, however, does not appear as a scar on the index in the sense that it was filled in from the following session.

We are in the heart of a deep, legitimate breath on the flagship tricolor index.

Two bearish targets present themselves: the bullish gap of February 22, the lower limit of which is worth 7,821 points, then the intermediate support at 7,700 points. Until then, the occasional formation of sharp downward acceleration in prices is not excluded, before remobilization of the buying camp.

FORECAST

Considering the key graphical 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 below resistance at 8120.00 points.

Hourly graph

Daily Data Chart