CAC 40: The 7,340 points, an important technical level

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Basically, the markets appear “relieved” to see the 2024 budget mechanically renewed, as it stands, less austere than the 2025 budget that the resigning head of government tried to push through at the start of the week, precipitating its fall. The President of the Republic, E Macron, tried to regain control last night, during a televised speech, castigating the attitude of the two extreme camps in the National Assembly, forming in his eyes for the occasion , a united anti-Republican front. He affirmed that he will exercise his mandate “until its end”, and that he will appoint “in the coming days” a new Prime Minister.

The CAC 40 managed to gain 0.37% on Thursday to 7,330 points, failing below 7,340 points which constitute a graphic resistance zone. An eye on the bond dial: the yield between France’s 10-year debt security and that of Germany with the same maturity, a barometer of market stress on French debt, is reduced further. It stands at 78 basis points, far from its level of 88 basis points on Monday.

In terms of statistics, note that weekly registrations for unemployment benefits stood at 223,000 new units. Enough to further gauge, after the solid ADP survey published on Wednesday, the flourishing health of American employment, before the “verdict” this Friday, namely the publication of the federal NFP report (Non Farm Payrolls) for the month of November.

This strength in American employment, combined with the inflationary and expansionary impulses of D Trump’s program, complicates the Fed’s task. According to the CME Group’s FedWatch tool, the probability of a 25 basis point drop in Fed Funds remuneration is 74% at the end of the next FOMC on December 18.

On the value side, Stellantis rose 3.8% while Bank of America reiterated its purchase advice in a sector note. The rise in the market was quite diffuse, with 33 CAC 40 stocks finishing higher. The notable exception remains Safran, which fell 7.3% after delivering medium-term objectives that were quite far from expectations. Excluding the CAC 40, Wavestone returned 6.4% after lowering its targets for its entire 2024-2025 financial year.

On the other side of the Atlantic, the main equity indices have “consolidated”, legitimately at this stage of their progress, notably the Dow Jones (-0.55%) and the Nasdaq Composite (-0 .18%). The S&P500, the benchmark barometer of risk appetite in the eyes of fund managers, contracted by 0.19% to 6,075 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 $1.0570. The barrel of WTI, one of the barometers of the appetite for risk on the financial markets, was trading around $68.00.

On the macroeconomic agenda this Friday, to follow in priority the monthly NFP report on the health of private employment in the United States at 2:30 p.m. and the preliminary data from the consumer confidence index (U-Mich) at 4:00 p.m.

KEY GRAPHIC ELEMENTS

With a candle with a long red body on Tuesday, November 12, the index defined the amplitude of a new working base, between 7,200 points on the one hand and 7,340 points on the other hand, which we switch to chart resistance zone. The thick volumes of this key session, combined with the opening gap, give meaning to the threshold break.

The 7,200 points constitute an increasingly fragile harassed floor. It was preserved last week, allowing the index to begin this week at the heart of the working band mentioned above. But on Tuesday, it was undermined once again, before breaking on gap on Wednesday. Weekly confirmation would have unfortunate consequences, since below, there is no branch to catch up on before the psychological threshold of 7,000 points, which has not been visited for a year.

The CAC managed to save 7,200 points on Monday, after opening well below like Friday 29/11. At the heart of the week, it even managed to close above 7,300 points, giving credence to the graphic scenario of volatile navigation in tidyeven in a diamond, between 7,090 and 7,340 points.

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 7340.00 points.

Hourly graph

Daily Data Chart