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Technical Analysis: CAC 40: Exit from the bottom of the channel

The CAC 40 Index is the main stock index of the Paris Stock Exchange. It gathers the 40 companies which trade most abundantly. In the ...

Day By Day – Indipendent Research

…medium term the index was in a clear bullish trend evidenced by an ascending channel and supported by the 200-day moving average. It was stopped by the major resistance at 4110 points, tested on two occasions but without success. The decline from this obstacle allows one to anticipate a reversal of the dynamic, scenario confirmed by the breaking of the lower threshold of the channel. We are therefore bearish for the weeks to come.

06062011 1

Close price 164.44

2 months Opinion BEARISH
2 weeks Opinion POSITIVE

Resistances 167,5 / 170 pts
Supports 162,3 / 159,4 pts

Anticipation :

In the shorter-term, following a recovery attempt stopped by the resistance at 4016 points, the prices pulled back violently. The strength of the movement, as evidenced by the opening of a gap, caused the breaking of a key threshold combining the lower threshold of the channel, the level at 3891 points and the 200-day moving average. The support at 3861.60 points, corresponding to the 38% retracement of the rise of June 2010 – February 2011, has been reached but should be broken in turn.  We are short-term negative, we expected a continued fall towards the major support at 3760 points, with an intermediate target at 3800 points.
We set the invalidation threshold of this opinion just above the resistance at 3891 points. Its overflow would delay this scenario; the CAC40 could extend its rebound to between 3937 and 4016 points before declining again. 

Traker’s Name Leverage Expense ratio
CAC 40 SHORT ETF x-1 0,4%
ComStage ETF CAC40 Short x-1 0,35%
EasyETF CAC40 Double Short x-2 0,5%
ETFX CAC 40 2x Short Fund x-2 0,6%
Lyxor ETF Short CAC 40 x-1 0,4%
Lyxor ETF XBear CAC 40 x-2 0,6%

Follow-up Analysys: Our DBD Tracker dated 28/03/2011 recommended the sale of the EPRA EUROZONE index. Since then, prices have reached our target of 1802 points, or a performance of 5%.

* A leverage of 1 means that the ETF/Tracker has the same performance as the underlying index. A leverage of 2 indicates that the ETF/Tracker will have twice the performance of the underlying index. A leverage of -1 indicates that the ETF/Tracker will perform opposite that of the index: it will rise while the index falls, and vice versa.



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Source: ETFWorld – Day By Day – Indipendent Research



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