Technical Analysis: CAC 40: Bearish correction

The CAC40 index is the main index of the Paris Stock Exchange. It is composed by 40 stocks among the most traded on the NYSE-Euronext market…...

Day By Day – Indipendent Research

For six months, the index has been consolidating in a slightly bullish channel. The lack of strong reversal pattern prior to this channel does not allow the forecast of a new bullish dynamics; conversely,nothing indicates that the overall bearish trend will resume as long as prices evolve inside the channel: we are therefore neutral on a mid-term horizon.

Anticipation  :
On the short term side, the overextendedbullish movement initiated at the bottom of the channel is showing some weaknesses:after the test of the highest threshold, prices opened a bearish gap and the 3409 points level has been reintegrated. The emerging bearish divergence on the MACD confirms the lack of breadth of the bullish dynamics and allows anticipating a pronounced correction.
We are thereforenegative in the short term and envision a setback in direction of the 3247 points support with an intermediate target at 3320 points.
The stop loss of this negative outlook is located just above the 3450 points resistance and former high.

Close price 3413.1

2 months Opinion NEUTRAL
2 weeks Opinion NEGATIVE

Resistances 3450 / 3580.26 pts
Supports 3320 / 3125 pts

Follow-up Analysys: The January 23th 2012 recommendation was a purchase of MSCI TAIWAN related ETFS. Since then, prices significantly overflowed our 272.60 points target, confirming a 3.2% performance on the target.


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Source: ETFWorld – Day By Day – Indipendent Research



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