CAC 40

Summary

Published 14th May 2018

The CAC 40 is most likely within a final swing into a cyclical top. A cyclical correction is likely to start within the next few months. We expect the correction to last multiple months to a couple of years.

CAC 40 Technical Analysis Short Term

Published 14th May 2018

The air is getting thin and risks increase at elevated heights. This applies not only to mountaineering but also to the CAC40 at its current juncture.

We see short-term strength diverging. The best looking picture is another brief spike into a higher high for the current swing up (since March 2018), which completes the entire swing. The subsequent pullback is most likely either a final E-wave of the triangle or a second wave. A less likely case is that the CAC 40 finishes all of its primary wave 1(circle) with another swing to the upside. We’ll deal with that after seeing more wave structure.

The bottom line is that the CAC40 has gotten riskier at this junction despite higher odds for a rally extension.

CAC 40 Technical Analysis Medium Term

Published 19th January 2018 & amended March 26th (chart only)

The CAC 40 technical analysis reveals that the index currently trades around a 17y old trend line. It is a good target for the subsequent primary wave correction. A similar situation can be seen at the IBEX and Eurostoxx 50 indices. However, the IBEX has a lagging wave structure and currently trades below the long-term channel support/resistance.

Over a longer period, the CAC 40 traced out a triangle, just like a few other European indices, as well. The triangle either completed in 2011 or 2016 as labeled in the chart above. A swift continuation of the trend of higher degree is projected after triangles complete. In this case, it is to the upside, which means a bull market in French equities for at least a major part of the coming decade.

Technical Analysis