CAC 40: Make way for Jackson Hole (finally)

(News Bulletin 247) – Investors are expected to be timid in trading today as Jerome Powell is expected to speak at the Jackson Hole symposium this afternoon. This speech is expected around 4:00 p.m., French time, while building permits in the United States will be published at 2:30 p.m. At the same time as the Chairman of the Federal Reserve is due to speak, new home sales will be published. Two Federal Reserve officials said they thought it was appropriate for the American central bank to start lowering interest rates soon and that the pace of further reductions should be “gradual” and “methodical”. However, the activity indicators, called PMIs published yesterday, indicate a still vigorous economy. Indeed, the Services PMIs came out above expectations. On the stock front, we will be following the case of Alibaba. The group announced that it will have a primary listing in Hong Kong from August 28, making it a dual primary listing in China and on the New York Stock Exchange. The move will allow investors from mainland China to invest in the group. A primary listing is a safeguard in case future tensions with the US force it to delist from the New York Stock Exchange. A primary listing means Alibaba will be subject to all the rules of the Hong Kong stock exchange as well as those of New York. On Paramount Global, Skydance Media accused Paramount’s board of “incurable material breach” of the terms of an agreed merger as the Hollywood group considers a rival bid from billionaire Edgar Bronfman Jr. Finally, the pullback from short sellers bodes well for BYD shares ahead of the results. Short interest in BYD’s Hong Kong-listed shares fell to 1.4% as of Aug. 21, from a high of 7.7% earlier this year, according to S&P Global data. Internationally, one currency to watch is the Japanese yen, as the unwinding of carry trades in the currency led to a broad-based correction in stock indices earlier this month. The Japanese currency strengthened after government data showed a rise in inflation. Government data showed annual core inflation rose to 2.7% in July, well above the BoJ’s 2% target.

Technical Section: The index has just set up a reversal candlestick, called a shooting star. This candlestick occurs after a long bullish run, suggesting a need for short-term consolidation. We can therefore position ourselves for sale thanks to this signal and aim for a return to the 20-period daily moving average.

FORECAST

Considering 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 7690.00 points.

Hourly data chart

Daily data chart