CAC 40: The ‘LVMH’ gap has been filled

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The first session of the week was the scene of a rebound of protest for the CAC 40 (+0.91% to 7,571 points), in volumes halved compared to the session of sharp decline on Friday. It must be said that the market remains very upset by the lack of visibility, at this stage, on the color and composition of the next government, and the positioning of the center of gravity of the hemicycle.

“Fears which relate to the programs of the political blocs which are trying to form themselves…or which have just been formed”, explains Alexandre Baradez (IG France). “Fears relating to the trajectory of the debt but also to questions of regulatory change and taxation.”

The market fears that populist groups, such as the National Rally, will implement policies that would weaken France’s already shaky public finances.

The market will have been supported in its attempt to rebound by the banks, weakened last week, like Société Générale (+1.17%) or BNP-Paribas (+1.25%). The insurer Axa gained 1.87%, just behind Essilor-Luxottica (+2.59%), supported by UBS.

Conversely, alcohol producers Pernod Ricard and Rémy Cointreau dropped 0.45% and 0.9% respectively while China announced an anti-dumping investigation into European pork imports. Which raises a little more fear of restrictive measures on French brandies.

Not much to take in on the statistics side on Monday. Note, however, the significant rise in the Empire State index (New York Fed manufacturing index) to -6.0. The agenda will thicken this Tuesday with the monthly retail sales report on industry in the United States. And especially Thursday with the first estimates from the PMI activity barometers, undoubtedly the macroeconomic highlight of the week.

On the other side of the Atlantic, the main stock indices ended Monday’s session in the green, like the Dow Jones (+0.49%) and the Nasdaq Composite (+0.95). %). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, gained 0.77% to 5,473 points.

Investors will note that the market will remain closed on Wednesday (Juneteenth – the day commemorating the end of slavery).

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 $1.0720. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $79.60.

On the agenda this Tuesday, follow retail sales in the United States at 2:30 p.m. and the federal report on industry at 3:15 p.m.

KEY GRAPHIC ELEMENTS

The shoulder, head and shoulder graphic figure traced since April 16 is in the process of breaking its neckline, which corresponds more or less to the gap of February 22, fully filled on 06/11 during the session. The short-term graphic configuration is significantly degraded.

In quick succession, the flagship tricolor index failed two major technical tests: it exited the bottom of a channel on May 29, and as seen previously, it exited the bottom of a chart pattern on June 10. Below 7,900 points, the situation remains worrying.

The “LVMH” gap has been filled. Ample, it was formed on January 26 following the publication of an excellent quarterly report from the luxury giant.

The weekly candle of week 24 testifies to a strong and continuous mobilization of the selling camp throughout the unit of time.

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 7900.00 points.

Hourly graph

Daily Data Chart