Potential signal:
- I am only buying this index.
- I would be a buyer if we can stay above 8650, on a daily close.
- I would have a stop at 8550 and a target of 8800.
The CAC in Paris tried to rally early on Thursday but failed to hang onto those gains. That being said, there is support just below.
CAC 40
The CAC in Paris initially tried to rally during the trading session on Thursday, but then rolled over to show signs of weakness. All things being equal, this is a market that continues to be bullish from a longer-term standpoint, though, and it looks like the 8,650 euros level is an area that people are going to be watching based on the previous resistance back in late February and the recent support. If the market were to break down below there, I suspect it could be a nice buying opportunity as it gives you an opportunity to pick up cheap contracts.
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The CAC is, of course, driven by a lot of different factors, but the luxury sector is a big one. One of the biggest problems that I believe CAC has is that the situation in the Middle East could cause major issues. It looks like it's not going anywhere, and a lot of luxury brands are driven by sales in the Middle East.
Luxury Sector Risks and Technical Support Zones
The 8,500 euros level underneath for me is a major support level that extends down to the 8,400 euros level, as the 50-day EMA is right in the middle of it. Ultimately, any pullback at this point in time and a bounce in that area would be an ideal technical setup, but if we bounce from the 8,650 euros level, you would have to assume that maybe we are just going to continue to consolidate and try to work off some of the froth from the recent shot higher.
Indices around the world look fairly healthy, not to mention some of the closely tied indices to the CAC, like DAX or even the FTSE. And the overall general area of Europe seems to be coming out of a bit of a funk. The question is going to be energy. If energy supply is secured, then it should start to really put a lot of interest into the EU. France, of course, would be one of the first places people would look.
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