- The French stock market has been extraordinarily strong for some time as the market is now stretching toward recent highs again.
- We are firmly above the €8200 level, an area that of course will attract a certain amount of attention.
- If we can continue to go higher and break above the high from last week, then it’s likely that the CAC will continue to simply be a “buy-and-hold” market.
- I have no interest in shorting this market, because it has shown so much in the way of strength. Furthermore, there are external factors that come into the CAC trading as well.
The first thing that I am paying attention to is the fact that the European Central Bank is very likely to continue to see the reasons to loosen monetary policy, and if that is in fact going to be the case, it does make a certain amount of sense that stock markets continue to rally on the continent. The Paris CAC is one of the major indices, so this obviously is one of the first places that people run to in order to invest in the European Union.
Technical Analysis
Currently, the 50-Day EMA is approaching the €7900 level, which is an area that previously had been support as we went sideways for about 2 weeks when we approached it. At this point in time, I believe that the €8100 level is also an area that a lot of people will be looking at as potential support, so with that being said I am bullish on short-term pullbacks as potential buying opportunities. With that being said, I have no interest whatsoever in trying to short this market and I do believe that France will continue to lead a lot of indices in the European Union higher, right along with the DAX in Germany.
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If we break above the recent highs, then I believe that the CAC will go looking to the €8500 level, which is the next large, round, psychologically significant figure that could cause a little bit of reaction. Ultimately, there’s nothing on this chart that suggests you should be selling, and each pullback will more likely than not continue to attract more inflows.
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