CAC 40: No divergence between prices and volumes

(News Bulletin 247) – Admittedly, the CAC 40 index hardly nibbled away yesterday (+ 0.06% to 7,156 points), but symbolically, the daily score is positive, the body of the corresponding candle is once again green, and volumes are not running out of steam, which in itself already constitutes a performance at this stage of the rally.

For the moment, nor the lingering fears around inflation (the Governor of the Bank of England Andrew Bailey admitted on Monday that the level reached in September, + 3.1% over one year in the United Kingdom, made it ” very uncomfortable “, and did not rule out a rate hike in December) nor the new outbreaks of the coronavirus epidemic are hampering the forward march of the Paris market, fueled by the remarkable content of the quarterly publications and corporate optimism about the outlook.

In terms of statistics, EuroStat has confirmed, at an annualized rate, a price increase of 4.1% in the monetary union. The increase is even revised downwards for prices corrected for volatile elements (food, energy, alcohol and tobacco), to 2.0%, against 2.1% initially calculated. Slight disappointment to report across the Atlantic, with housing starts showing stable in October, below expectations.

On the value side, in the game of sector rotation, and rotation in the styles of values, after luxury on Tuesday, it was industry and construction that supported the rating on Wednesday, like Arcelor Mittal ( + 1.34% to 27.32 euros), Legrand (+ 1.48% to 93.20 euros), Saint Gobain (+ 1.70% to 61.11 euros), or Schneider Electric (+ 1.76% at 158.62 euros). Excluding the pahre index, the automotive supplier Faurecia finished slightly in the green (+ 0.06% to 48.51 euros) after announcing that it would hold 79.5% of its German counterpart Hella, specializing in lighting, following its public offer launched in September. The discreet holding of the Burelle family (owner of Plastic Omnium) continues its sharp rise (+ 7.71% to 754 euros after + 6.1% Tuesday) against a background of catching up after a complicated stock market course in 2021.

On the other side of the Atlantic, the main equity indices contracted somewhat, like the Dow Jones (-0.58% to 35,931 points) or the Nasdaq Composite (-0.33% to 15,921 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, lost 0.26% to 4,688 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 1,1320$. A barrel of WTI, one of the barometers of risk appetite in financial markets, was trading around 77,60$.

To follow on the statistical agenda this Thursday, as a priority, the manufacturing index of the Philadelphia Fed (the Philly Fed) and the weekly entries for unemployment benefits at 2:30 p.m.

KEY GRAPHIC ELEMENTS

The CAC 40 index, a benchmark barometer, however imperfect it may be, of the Paris Stock Exchange, is regularly registering new absolute highs. After the bullish gap on Monday 01/11, a powerful structure of “three white soldiers advancing” has been validated. The 5 candles of the week in question also display a green body: systematically, the closing exceeded the opening, whatever the level of opening compared to the day before. These two observations materialize, together with the transaction volumes, a phase of momentum during expression. The three shadows on the candles of 05, 08 and 09/11 show a perfectly legitimate breathlessness, but without profit taking. The bodies of said candles are otherwise green. The entry into the breathing phase of the lessons is to be anticipated. A flat breath, at first, so encouraging is the absence of divergence between prices and volumes.

PREVISION

With regard to the key graphic 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 the 7500.00 points would rekindle the purchase tension. While a break of 6960.00 points would revive the selling pressure.

Hourly data graph

Daily data graph

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