The Parisian CAC 40 Index initially shot above the €7000 level on Wednesday but then gave back the gains late in the day as we plunged towards the €6900 level. That is where the 50 day EMA sits and is rising. The resulting candlestick for the day is a bit of a shooting star, so I do not know that support will hold, at least in the short term. Nonetheless, there should be plenty of support underneath near the €6800 level based upon the trend line. It is also worth noting that we are currently sitting right at a gap from about two weeks ago.
To the downside, if we do break down a bit, then I will wait for a daily close that looks a bit supportive. Keep in mind that we are starting to run out of trading weeks, and liquidity will cause a certain amount of trouble. If the €6800 level gets broken to the downside, then I think we could see a little bit more of a serious correction. I currently do not see that as a major threat though.
It will be interesting to see how the CAC reacts to the Federal Reserve meeting, as they were not nearly as hawkish as people had thought. I believe we will probably see this market try to rally during the day, but whether or not it can break out above that barrier near the €7100 level is a completely different question altogether. I suspect that we are probably going to see a lot of sideways volatility, but that is probably a fair guesstimate as to what is going to happen with most indices over the next couple of weeks.
This time a year, I typically trade a much smaller position size and focus on range-bound trading. I do favor the upside in this market, as I do with most stock indices, simply because they are built to go higher over the longer term. The overall attitude of this market is one that wants to go higher, but probably needs more volume to really take off to the upside. The €7200 level right now seems to be the ceiling, and I would be a bit surprised to see that broken between now and the end of the month.
