(News Bulletin 247) – The CAC 40 stood still yesterday (+0.07% to 6,542 points), in timid volumes, on the eve of the outcome of a new Board of Governors of the European Central Bank. See you at 1:45 p.m. for the actual monetary decision and at 2:30 p.m. for the press conference, against a backdrop of chronic inflationary pressures.
If on the side of the Fed, the monetary turn is intended to be offensive, including in the camp of the members reputed to be the most “dovish” (dove, that is to say follower of flexibility in monetary matters), “on the side of the ECB, the message is a little more blurred”, for Thomas Giudici, co-head of bond management at AURIS Gestion. “If the path of tightening is certain, divergences remain between the members. While some believe that an accelerated monetary tightening would have little or no impact on inflation, essentially driven by oil prices energy, the most hawkish members believe, on the contrary, that the ECB’s inflation forecasts are far too optimistic (return to 2% from 2023) and are therefore less patient in the face of the uncertainty generated by the Ukrainian crisis.
In the immediate term, the opening of the last session of the week – before a four-day break for the Easter weekend), is looming in positive territory, within narrow margins, in particular in the wake of the announcement by Beijing of monetary measures to ease the situation after weeks of confinement in certain regions, in particular in the economic and financial lung of Shanghai.
Investors will naturally continue to keep a close eye on the conflict in Ukraine. The American President has passed a semantic milestone by qualifying as “genocide” the action perpetrated by the Russian army. “Not sure that the escalation of words will advance the cause”, commented the French President candidate for his own re-election, yesterday morning on France 2.
In terms of statistics, operators took note of the producer price index in the United States, which came out very clearly above expectations for March, in basic or underlying data. On a month-on-month basis, producer prices rose in their widest base by 1.4%…
Side values, LVMH managed to close in the green (+0.51% to 634.10 euros). Sales of the world’s number one luxury brand had received a mixed reception, with analysts noting in particular a black spot in the group’s performance in the “wines & spirits” division, up only +2% with in particular a drop in volumes for the Hennessy cognac, due to supply and logistics constraints. For their part, Pernod Ricard (-2.49%) and Rémy Cointreau (-4.40%) are particularly penalized because of their exposure to the cognac segment.
On the other side of the Atlantic, the main equity indices ended Wednesday’s session in the green like the Dow Jones (+ 1.01% to 34,564 points), but especially the Nasdaq Composite (+ 2.03% at 13,643 points). The S&P 500, the benchmark barometer of risk appetite in the eyes of fund managers, rose 1.12% to 4,446 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 $1.0920. The barrel of WTI, one of the barometers of risk appetite in the financial markets, was trading around $103.70.
To follow in priority, on the agenda this Thursday, across the Atlantic, retail sales and weekly registrations for unemployment benefits at 2:30 p.m.
KEY GRAPHIC ELEMENTS
The 6,760 points, which we have identified so far as a gradually weakened floor, gave way, on a wide gap on Thursday 02/24, 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.
Friday 25/02’s pullback was surgically precise. A phase of high volatility has thus begun. The school marubozu drawn on Tuesday 01/03 is a first step. Second stage Friday 04/03 with a candle of the same type (opening on the high points, closing on the low points) in even more fed volumes. A new bearish leg would open under 6,000 points, already broken on Monday 07/03, before the formation of a dispute rebound.
On Wednesday, March 09, we witnessed a first phase of an explosive protest rebound, which pushed the index back to its 100-hour moving average (in orange in hourly view), a curve that retains a marked downward bias. The gap on Wednesday March 16 is not a signal to return to buying, and the high volatility phase is therefore not yet over. The configuration, in the form of a combination of candles, in three black crows over the last three sessions of week 12, calls for the greatest caution. As evidenced by the harami traced immediately after a reconquest of 6,760 points, for a single closing, that of March 29. Note the bearish engulfing character of the weekly candle of week 14 on the candle of week 13.
We avoided this week the formation of a reversal island under the March 16 gap. Neutral opinion across the upcoming session.
FORECAST
In view of 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 a crossing of 6760.00 points would revive the tension in the purchase. While a break of 6425.00 points would relaunch the selling pressure.
Hourly data chart
Chart in daily data
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