Good reasons for watching French stocks very closely
3rd December 2018 08:34
by Alistair Strang from Trends and Targets
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With the French index in danger of falling below the uptrend since 2011, technical analyst Alistair Strang reveals what the repercussions could be.
France, the CAC40
The French initiative of raising fuel prices to get more cars off the road seemed to work. Paris looked quite entrancing, burning cars and red smoke giving the city an unusually poisonous festive glow, only lacking the occasional guillotine silhouette to complete the picture. One can only hope the UK government is considering the disparity between petrol and diesel prices and asking questions. (clue; nope)
Unlike fans of their government, the French stockmarket is now experiencing some hesitant behaviour with the potential of some relaxation rearing its head.
At present, the index is trading around 5,020 points, needing below 4,890 to signal coming trouble. In such an event, we're looking at relaxation potentials to an initial 4,730 points. Secondary, when broken, calculates at 4,425 points. The problem with the secondary is fairly obvious.
By moving below the uptrend since 2011, the French index enters a region with a logical bottom around 3,870 points, visually matching the lows of 2016.
Obviously, with such a massive haul of points potentially available, where does any stop loss need to be, if playing 'La Grande Image?'
We would hope the market needs above 5,166 points to cancel the drop potential but, realistically, we'd prefer wider at 5,205 points.
Movement above 5,205 is supposed to enter a miracle recovery cycle to an initial 5,362 points. If bettered, secondary is at 5,430.
Visually, similar to the Paris skyline, we are not hopeful for the future…
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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