CAC 40

Summary

Published on 10th November 2017 & amended December 12th 2017

Our forecast is a continuation of the short term correction into the 5,150-5,235 area. Nevertheless we are bullish for French stocks in the medium term. We believe to approach the 6,000 points in the next few months. Long term we are bullish as well for French equities. Our expectation is a bull market that lasts a major part of the coming decade. The fundamental and technical setup looks attractive for France.

CAC 40 Technical Analysis Short Term

Published on 12th December 2017

The CAC 40 departed outside the light green trend channel, which we’ve shown in our November 30th update further below. We currently believe that the corrective action is still ongoing in the CAC 40. It could morph into a b°-wave triangle, which resolves to the downside. This is our base case and depicted by the black count.

Nevertheless, we should not neglect the possibility, that the entire correction for the CAC 40 is finished already. The initial wave i°, which we’ve marked in red counts as an expanding leading diagonal. The market should progress swiftly to the upside if red count of our bullish case here is true.

However, the impulsive decline from early November’s top in combination with choppy wave action since our a° label favor the black count. We therefore expect continuation to the downside for the CAC 40 short term. 

Published on 30th November 2017

We stick to our short term CAC40 forecast, which we’ve published on the 17th of November. Our short term CAC40 outlook sees the correction that started November 1st to continue. The tape recorded an impulsive drop from November 1st highs. Subsequent wave action to the upside has retraced a fibonacci 61.8% in an overlapping manner. Moreover, most other main European indices also seem to have traced out incomplete corrections right now. Therefore we expect lower levels in French equities for the days ahead!

Published on 17th November 2017

We’ve forecasted a correction at least into the 5220-5340 area. The CAC 40 traded down to 5,267 right into our forecasted band and started its first significant push up in the entire correction since November 1st 2017. Unfortunately minuette wave structure speaks for an extension of the correction. The drop from Nov. 1st looks impulsive right now. We find alternation within waves (ii) and (iv) and an extended (iii) wave. This means followthrough to the downside sooner or later.

Our next target area consists of the 5,150-5,235 points range. This consists of a series of S/R as well as fibonacci retracements. Thereafter our forecast sees a strong push in wave 3 that should carry the index close to the 6,000 points area.

CAC 40 Technical Analysis Medium Term

Published 29th October and validated 12th December 2017

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 wave 2 or wave 2° correction. A similar situation can be seen at the IBEX and Eurostoxx 50 indices. However, the IBEX has a lagging wave structre and currently trades below the long term channel support/resistance.

We expect intermediate wave (5) to carry CAC 40 prices into the 5,672-6,150 region, which forms a cluster of resistance. Thereafter the 17y-trendline could be once again a typical target for a correction into primary wave 2°.

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 equites for at least a major part of the coming decade.

Technical Analysis