CAC Gets off to a Flying Start but Fails to Maintain the Rally

The stock markets got off to a volatile start today, the CAC index started on a steep rally that evaporated within hour from the open.

Yesterday saw a turn in sentiment on interest rate cuts from the Fed, which would pave the way for cuts by the ECB. Several comments by FOMC members stating that rates would stay high for longer sent stocks lower.

While the CAC failed to reach a new all-time high on Wednesday after US inflation came lower than last month. The data suggested that the Fed would be on track to cut rates sooner rather than later.

However, subsequent comments have dashed those hopes and the market is readjusting to the possibility of interest rates staying high for longer. There is no substantial economic data today from the US that might have spurred the market back to bullish.

The Eurozone will receive inflation data later, which is expected to be lower at 2.7% from 2.9% YoY. The ECB inflation target is 2%, so we may see a small boost after the release. However, US markets are down slightly on the European open, so we may see the CAC dragged down regardless of lower Eurozone inflation.

Technical View

The day chart below for the CAC shows a bullish market that has recently hit the resistance of the all-time high set in April (red line). The last 3 candles (area B) have made a pattern that signals a possible retracement.

The broader view of the chart also shows a double top formation between the areas A and B. The next support level is at 8127 (blue line), if that breaks the market will find support from the Ichimoku cloud.

For the bullish trend to regain momentum we would need to see a close above the previous ATH of 8261.

ABOUT THE AUTHOR See More

Gino Bruno D'Alessio

Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.

Related Articles

Forex Signals Brief May 12: Markets Focus on US Inflation and Trade Deals This Week

6 days ago

Save

Trump’s Chip Comments Lift NVDA Stock — More Upside Ahead for Nvidia?

1 week ago

Save

Forex Signals Brief April 8: Coinbase and Shopify Earnings Close the Season

1 week ago

Save

Comments

Leave a Reply Cancel reply

You must be logged in to post a comment.