The CAC Index is currently grinding away, trying to eclipse the 6800 level. This is an area that has been important more than once, so it should not be a major surprise that we would see this market stall just a bit. That being said, if we can break above the €6800 level, then it is likely that the CAC will go looking towards the 6900 region above, which was the most recent rally. The pullback from there of course was something that was overdue, and now we have bounced around in order to form a bit of a bottoming pattern.
The 50 day EMA is sitting underneath and offering a substantial amount of support, as well as turning a little bit higher. At this point, the market is likely to continue to see buyers down to at least that area, and at this point in time I like the idea of buying dips going forward. After all, indices around the world continue to show signs of strength, and the Parisian index will be any different. With that in mind, I think the market will continue to see a lot of choppy behavior, but every time it starts to sell off, I think there will be buyers looking to take advantage of any value that they can see.
The Parisian index is highly sensitive to global trade, as it is greatly influenced by luxury brands. These are things that people do not necessarily need, but they want. In other words, you need to see true global demand in economic activity pick up in order to make this thing go higher. Because of this, I think we need to have more of a “risk on” attitude going forward, and therefore it is likely we will continue to see a lot of upward pressure as the reopening situation should continue to favor luxury goods as the rich start to spend more. If we were to break down below the 50 day EMA, then it is possible that we could go looking towards the €6400 level, but that does not look likely to happen at this point. Because of this, I remain bullish, but I also recognize that there is probably going to be a certain amount of noisy behavior in the short term. The volatility continues to be an issue, but I do think it is only a matter of time before the breakout.
