CAC 40: Technical test in the lower part of the canal

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Since the recording of new historical records on May 10 in session data, the CAC index has fallen towards the lower limit of a bullish channel, a support level whose reliability and solidity are currently being tested, against a backdrop of questions about the Fed’s ability to finally initiate a downward movement on its key rates. The flagship French index lost 0.89% over the whole of last week, and is entering this week on a cautious note in the absence of American benchmarks due to the closure of Wall Street for a public holiday.

“Large stocks in developed countries are crumbling and small stocks are falling back. China is subject to profit-taking after the remarkable catch-up over the past month. In the United States, the technology sector is benefiting from Nvidia’s results” , synthetic Jeanne Asseraf-Bitton, Head of Research and Strategy at BFT IM.

It must be said that NVidia is no longer the only compass for a market which was worried, last week, about a warming of the American 10-year bond. The content of the Fed Minutes, very cautious interventions by Fed executives and some firm statistical benchmarks, in fact made it necessary to review the copy. Some Federal Reserve executives simply do not rule out the possibility of a final increase in rates if this proves necessary.

In terms of American statistics on Thursday, investors took note of the weekly registrations for unemployment benefits, still very close to the threshold of 200,000 new units. Another leading indicator of inflation, the PMI activity barometers: The S&P Global composite PMI index increased to 54.4 in May, in a first estimate, against 51.3 points the previous month. This is its highest level in almost two years. These are all signals which testify to the robustness of the world’s largest economy, and which in turn fuel tensions on the bond market.

Just like the durable goods orders published on Friday, and the revised consumer confidence index (U-Mich), both well above expectations.

On the value side, Renault gained 5.21% to 50.30 euros, supported by a note from UBS which abandoned its sell recommendation to move it to neutral. Vusiongroup (formerly SES-imagotag) returned 10%, after an attack by the hedge fund Shadowfall, which accused the former SES-imagotag of accounting irregularities, according to the Dow Jones agency. The company reacted to these attacks with News Bulletin 247 and denounces this “new market manipulation”, which it believes is “totally unfounded”.

On the other side of the Atlantic on Friday, if the Dow Jones remained stable, the Nasdaq Composite, with a strong technological coloring, gained 1.10% to 16,920 points. The S&P500, the reference barometer of risk appetite in the eyes of fund managers, increased by 0.70% to 5,304 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 $1.0850. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $77.80.

On the agenda this Monday, to follow as a priority the IFO business climate index in Germany at 10:00 a.m.

KEY GRAPHIC ELEMENTS

The resistance level of 8,120 points gave way on Thursday 09/05 in insignificant volumes due to the absence of numerous operators. However, in the very short term, the new working framework is between these 8,120 points, and the absolute peaks close to 8,220 points, i.e. a thin band of around a hundred points. All taking place at the heart of an ascending channel, the lower limit of which (support) can be tested quickly. This is a major technical test, in progress.

If we zoom out a little, it is a wide band of 400 points which can accommodate, in the weeks to come, nervous oscillations. A contrarian attitude is going to be key for mobile investors.

FORECAST

Considering the key graphical 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 crossing 8220.00 points would revive the buying tension. While a break of 8000.00 points would restart the selling pressure.

Hourly graph

Daily Data Chart