CAC 40: Below 6,760 points, the configuration remains problematic

(News Bulletin 247) – The CAC 40 fell back yesterday (-1.39% to 6,658 points), in very thick volumes, volumes fueled by political, geopolitical, economic and military uncertainties, in the short and medium term , induced by the Russian invasion of Ukraine. One thinks spontaneously of the “natural gas” component, on which Germany depends overwhelmingly on Russian production and delivery, and of the consequences on the prices of other hydrocarbons, oil in mind. But other “commodities could also be affected, particularly those for which Russia is among the most important producers: nickel, palladium, uranium and fertilizers. In such a scenario, inflationary pressure would be even more significant, with higher food prices or even higher semiconductor prices”, warns François Rimeu, Senior Strategist, La Française Asset Management.

Once again, macroeconomic statistical figures have been relegated to the background. It should be noted all the same, a missed target for the American trade balance in goods in January, the deficit passing the symbolic bar of 100 billion dollars. Also missed target was the Chicago PMI Industrial Activity Barometer, at 56.3 this month.

On the securities side, a certain number of files whose activity is linked, very directly or not, to armaments, military technologies or cybersecurity continued to gain ground, such as Dassault Aviation (+7.87% at 134.30 euros) or Thales (+ 11.87% at 102.90 euros), to name the heavyweights of the rating. Conversely, banking, and particularly those with a significant presence in Russia, and automotive, including equipment manufacturers, suffered a lot on the stock market on Monday, like Faurecia (-5.47% to 34 .05 euros), Valeo (-6.41% to 19.785 euros), Renault (-6.56% to 28.54 euros), BNP-Paribas (-7.47% to 52.51 euros), or Société Générale (-9.89% to 25.64 euros).

On the other side of the Atlantic, the main equity indices closed in mixed order, with the Dow Jones losing 0.49% to 33,892 points and the Nasdaq Composite managing to gain 0.41% to 13,751 points. The S&P 500, the reference barometer of risk appetite in the eyes of fund managers, ended down very slightly by 0.24% at 1,373 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 $1.1220. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $95.20.

To follow in priority, on the agenda this Tuesday, the manufacturing PMI in final data (IHS Markit) for the Euro Zone at 10:00 am, and the American manufacturing PMI (ISM) at 4:00 pm.

KEY GRAPHIC ELEMENTS

The 6,760 points, which we have identified so far as a gradually weakened floor, gave way, on a wide gap, opening the way to a new market phase. Recall that the index traced from February 16 to 18 a combination of candles in three crows. This combination was immediately followed by a very significant bearish engulfing structure, accompanied by volumes that were far from timid for a session, let’s not forget, without American benchmarks due to a public holiday. The last phase of weakening of the aforementioned support will therefore have been aggressive. the pullback Friday will have been surgically precise. A phase of high volatility begins.

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 6760.00 points.

Hourly data chart

Chart in daily data

©2022 News Bulletin 247