CAC 40 Futures Forecast November 6, 2012, Technical Analysis

The CAC 40 futures market rose during the session on Monday, but was repelled at the €3500 level. This is getting close to the top of the consolidation area that we’ve seen recently, and as such a pullback from that level is an overly surprising.

The candle form for the session was a shooting star however, and this of course has of thinking that this market will continue to grind back down towards the €3400 level. On a break of the bottom of the candle for the session, we are willing to take a small position short of the French markets.

 

CAC 40 Futures Forecast November 6, 2012, Technical Analysis
CAC 40 Futures Forecast November 6, 2012, Technical Analysis

 

CAC 40 Futures for the week of November 5, 2012, Technical Analysis

The CAC futures gained over the last week, as we continue to consolidate between 3350 and 3550. It is at the €3350 level that we would consider selling the futures as this market would be showing a little bit of a break down at that point. However, we see an obvious level at €3600 for a buy signal as it would show resistance giving way. In the meantime, this market looks like it’s very tight and wants to consolidate – which of course is not conducive for the long term trader.

 

CAC 40 Futures for the week of November 5, 2012, Technical Analysis
CAC 40 Futures for the week of November 5, 2012, Technical Analysis

CAC 40 Futures Forecast November 5, 2012, Technical Analysis

The CAC futures rose during the Friday session, as the €3400 level continues to act as support. However, we see the €3500 level as resistance. In other words, this market is wound up extremely tight. It is probably one of our least favorite European indices at the time, as it simply seems “stock” at this point in time. With this in mind, we have obvious levels of €3500 in order to start buying and below the €3400 level in order to start selling. It should be noted however that many of the indices around the world look extremely vulnerable at the end of the day Friday.

 

CAC 40 Futures Forecast November 5, 2012, Technical Analysis
CAC 40 Futures Forecast November 5, 2012, Technical Analysis

CAC 40 Futures Index November 2, 2012, Technical Analysis

Paris had a nice rally in the afternoon after initially falling for the Thursday session. The €3400 level holds as support yet again, and suggests that this market is trying to find some type of consolidation move. We do see the €3550 level as potential resistance, so we think although this bar is impressive; the potential move is probably somewhat limited. With all this being said, we do believe in the overall strength of this market, and as such would look to dips as additional buying opportunities until we get below the €3350 level.

 

CAC 40 Futures Index November 2, 2012, Technical Analysis
CAC 40 Futures Index November 2, 2012, Technical Analysis

CAC 40 Futures Forecast November 1, 2012, Technical Analysis

French stocks rose during the session on Wednesday, but gave back most of the gains in order to form a shooting star. We currently sit just above the €3400 level, which has been the beginning of a significant amount of support. In fact, we feel that this level show support all the way down to the €3300 level, and as such we are not willing to sell at this point in time.

If you have to invest in European stocks, Germany or France would be the place to do it. However, with the taxes being raised so drastically in France, it’s hard to believe that capital isn’t leaving the country. With that being said, why would anybody want to invest in French stocks? This is going to be a continuing problem going forward, as it is only a matter time before taxes on capital gains gets larger as well.

Looking at this chart, it appears that we are essentially consolidating between the €3350 level, and the €3550 level. The market has been choppy overall, and this is to be expected in a situation where we know that there are massive debt issues in Europe, but nobody really seems sure what to do about. Because of this, there’ll always be a bit of weight upon the shoulders of the European indices.

Looking forward, if we get a daily close above the €3600 level we would become massively and aggressively bullish of French stocks. More than likely, on a move higher, the financials will do quite well as this would probably be due to the fact that some type of workaround was done involving Spanish debt. As French banks are heavily leveraged to Spanish debt, any time we can get good news out Spain, it should continue to help French banks.

With this being said, we think that we will continue to chop around consolidate. However, longer-term trading dictates that above €3600, we would have to be long French financials. €3300 level would have us aggressively short of the CAC.

 

CAC 40 Futures Forecast November 1, 2012, Technical Analysis
CAC 40 Futures Forecast November 1, 2012, Technical Analysis

CAC 40 Futures Forecast October 31, 2012, Technical Analysis

The CAC 40 futures index got a bit of a boost at the €3400 level on Tuesday as we formed a hammer. The continuation of consolidation looks to be what the market wants to do, and as such we are willing to go long of the futures market on a break of the Tuesday highs. We believe that the move will be capped at the €3550 level, so this is a short-term trade.

As for shorting this market, we would have to get underneath the €3300 level, as it is the bottom of a gap that formed back in the early part of August. We have been consolidating every since then, and as such we feel that more than likely this market will continue to do just that.

 

CAC 40 Futures Forecast October 31, 2012, Technical Analysis
CAC 40 Futures Forecast October 31, 2012, Technical Analysis

CAC 40 Futures Forecast October 30, 2012, Technical Analysis

The CAC 40 had a very bullish session during the Monday trading hours, as the recent support at the €3400 level has been confirmed. It looks like we’re heading back into consolidation again, and as such we figure that he moved to €3500 is pretty much a given at this point. Because of this, we are actually long of the French index, and as such are aiming for €3500. As for selling, we do not see the opportunity to do so until we get well below the gap that was filled a couple of weeks ago.

 

CAC 40 Futures Forecast October 30, 2012, Technical Analysis
CAC 40 Futures Forecast October 30, 2012, Technical Analysis

CAC 40 Index forecast for the week of October 29, 2012, Technical Analysis

Parisian stocks obviously fell during the week, but what’s more important is that we got a bit of a bounce towards the end of trading. The market currently has a very obvious resistance point at the €3600 level, and as such for the long term trader this is a “gateway” to higher pricing. This is exactly what we’re waiting on, and will go aggressively long French stocks and the CAC futures market if we can get above the €3600 level on a daily close. Until then, we expect to continue to bounce around between €3350, and the €3600 level.

 

CAC 40 Index forecast for the week of October 29, 2012, Technical Analysis
CAC 40 Index forecast for the week of October 29, 2012, Technical Analysis

CAC 40 Index Forecast October 29, 2012, Technical Analysis

The CAC 40 had a fairly positive session on Friday, in order to show support at the bottom of the recent consolidation range. Currently, it appears that we are stuck between the €3360 level, and the €3600 level. As we are towards the bottom of this range, we are bullish at this point in time. We like dividend paying stocks, but would avoid the futures market simply because of a lack of clarity with all things European related. Headlines can come through and crush your position in an instant the way things have been going lately. Because of this we like household names until we get above €3600.

 

CAC 40 Index Forecast October 29, 2012, Technical Analysis
CAC 40 Index Forecast October 29, 2012, Technical Analysis

CAC 40 Futures Forecast October 26, 2012, Technical Analysis

The CAC 40 Futures fell during the session on Thursday, but found support right around the €3400 level. Looking at this chart, it appears that we will remain within a consolidation area between here and €3500, and as such we are positive on this particular market.

This does make sense, as the peripheral countries in Europe are shunned at the moment. France and Germany are by far the two largest economies, and as such money will flow into them in a bit of a safe haven bid. Nonetheless, we think that we are simply consolidating, and not building up any massive bullish pressure.

 

CAC 40 Futures Forecast October 26, 2012, Technical Analysis
CAC 40 Futures Forecast October 26, 2012, Technical Analysis

CAC 40 Futures Forecast October 25, 2012, Technical Analysis

Paris saw the CAC fall during the session on Wednesday, and test the €3400 level. This area begins a significant amount of support all the way down to the €3500 level, and as such we expect this market to be somewhat elevated at this point. However, we admit freely that the €3300 level is an area that if we break through, market should fall quite a bit farther. In the meantime, we are simply waiting to see how the market reacts to this general vicinity, and will not hesitate to buy supportive candles if they should appear.

 

CAC 40 Futures Forecast October 25, 2012, Technical Analysis
CAC 40 Futures Forecast October 25, 2012, Technical Analysis

CAC 40 Futures Forecast October 24, 2012, Technical Analysis

The CAC had a very negative session during Tuesday, as the 3500 level offered far too much resistance for the buyers than they can handle. Below, we see the 3300 level as a support “zone”, and as such we think that we could be falling to test that area in the near-term. The fact that we closed the very bottom of the candle for the session suggests that there is further weakness without a doubt, and as such we will be very leery of any bullish action in this market.

With a loss of 2% during the Tuesday session, we suspect that there is more to go. We would look for supportive candles right around 3300, and would start buying at that point time. However, if that level gives way to the sellers, this market could fall much farther.

 

CAC 40 Futures Forecast October 24, 2012, Technical Analysis
CAC 40 Futures Forecast October 24, 2012, Technical Analysis

CAC 40 Futures Forecast October 23, 2012, Technical Analysis

The CAC futures fell significantly during the Monday session, breaking the bottom of two previous hammers that signals significant weakness in this market. Because of this, we think that we are going to continue in the recent consolidation area as are simply nothing to push the markets in either direction.

Because of this, we think there is a trade if you’re willing to short this market and aim for roughly 100 points. We don’t necessarily think this market about of meltdown, but rather just return to roughly the 3350 level. As for going long, we need to break above the 3600 level in order to consider it.

CAC 40 Futures Forecast October 23, 2012, Technical Analysis
CAC 40 Futures Forecast October 23, 2012, Technical Analysis

CAC 40 Index forecast for the week of October 22, 2012, Technical Analysis

French stocks did fairly well during the week, gaining a little over 100 points by the end of the Friday session. However, Friday did look a bit suspect and week, so we feel that perhaps a pullback is coming. Simply put, we think this market is in a little bit of consolidation before making its next major move.

With this being said, we do not anticipate long-term traders being available in this market unless one of two conditions are met: either we break above the €3600 level in order to start buying, or we break below the €3350 level to start shorting this market. In the meantime, there will be no long-term trades until one of these two things happen.

 

CAC 40 Index forecast for the week of October 22, 2012, Technical Analysis
CAC 40 Index forecast for the week of October 22, 2012, Technical Analysis

CAC 40 Index Forecast October 22, 2012, Technical Analysis

The Paris index had a fairly bearish day on Friday, as profit-taking became the norm worldwide. This area we find ourselves in currently at the €3500 area is a significant spot on the chart, and as such it will be interesting to see where the market goes next. As a general rule, we have found that once the European lawmakers meet, disappointment generally overcomes the financial markets on the whole. This certainly was the case during the Friday session as stock indices sold off in lieu of a fairly unimpressive bank bailout situation in the European Union.

Adding to that was the continued reluctance of the Spanish to accept a bailout, and as such we are still in the same position that we have been in for far too long. Many French banks are heavily exposed to Spanish debt, and as long as there is a doubt about what’s going to happen, there will be a certain amount of pessimism in the Parisian index on the whole. With this being said, it is difficult to get overly long of this market, and you would have to imagine that a range bound trading feel wouldn’t be too hard to accomplish.

Looking at the charts now, it appears that we are simply trying to get range bound between €3600, and the €3350 level. If this is the case, then we are certainly at the top of the range and would expect a pullback over the next couple of sessions. This will certainly be true as long as the financials way down French stocks, as they are one of the leading drivers.

Looking at this chart, if we managed to break below the €3300 level, we think this would be an extraordinarily bearish sign. If that’s the case, we would begin shorting any French bank and we possibly could, mainly because we understand that the catalyst would more than likely be something to do with Spanish debt more than anything French related. As far as going long, if we get above the €3600 level, we think this is a buy and hold market.

 

CAC 40 Index Forecast October 22, 2012, Technical Analysis
CAC 40 Index Forecast October 22, 2012, Technical Analysis

CAC 40 Forecast October 19, 2012, Technical Analysis

Paris had a reasonably decent showing on Thursday considering how much the CAC had gained over the last two sessions. The CAC still looks strong, and as such we believe that this is eventually going to be a buy-and-hold type of scenario. With the Spaniards been so close to asking for a bailout, we think French banks will be some of the strongest performers in Europe. Remember, they are heavily exposed to Spanish debt, and once the debt is considered solvent and reliable, many investors will not only rush to get into the French banks, but many of the ones who have shorted it will cover their positions.

The 3600 level seems to be vital for the buyers to cross in order to get to this buy-and-hold mentality. Until then, we would buy this index on pullbacks that show signs of support. We fully expect that there will be plenty of opportunities, but eventually the €3600 level will be broken by the bullish.

 

CAC 40 Forecast October 19, 2012, Technical Analysis
CAC 40 Forecast October 19, 2012, Technical Analysis

CAC 40 Index Forecast October 18, 2012, Technical Analysis

Parisian stocks did extraordinarily well during the session on Wednesday as the market broke above the 3500 level. Paris saw massive buying upon speculation of a potential Spanish bailout, which of course would move all risk assets in the European area higher.

Looking forward, we see the €3600 level as a bit of resistance, but with the recent action, and would not surprise us to see this market go much higher. Look for headlines out of Madrid and not Paris to dictate where this market goes over the long term. If the Spanish to ask for the bailout, this market should continue to gain quite rapidly as many French banks are knee-deep in Spanish debt. As long as is market is bullish, buying French banks is probably one of the stronger trade you can make.

 

CAC 40 Index Forecast October 18, 2012, Technical Analysis
CAC 40 Index Forecast October 18, 2012, Technical Analysis

CAC 40 Index Forecast October 17, 2012, Technical Analysis

The CAC 40 had a strong showing as Parisian stocks outperformed most other markets. As the index stopped at the €3509.5 level, it looks as if we are set to try and break through the overhead resistance that we see forming between here and the €3600 level. With this being said, we think that pullbacks at this point in time will offer buying opportunities, as it appears that European indices in general were placated by the talk of the Spanish getting ready to ask for a bailout.

This should facilitate higher beta stocks outperforming many of the others as the market will become a “risk on” environment. With that being said, we think that the CAC should do quite well over the next several weeks. If we were to see the €3600 level give way, we think that this could be more of a buy-and-hold type of situation with the higher beta stocks. Alternately, if we break down below the €3300 level, we think this would be a horribly bearish sign and have us shorting the very same higher beta stocks.

Financials will do especially well if the Spanish get bailed out. There are many French banks exposed to the debt issues in Spain, and as such we suspect that many of the will do quite well if Spain itself is recapitalize. This essentially takes the default concerns off of the table, and as such would be seen as a massive bailout for not only Spain, but German and French banks as well.

This because of that one of our favorite stocks will be SocGen, as it is one of the most heavily leveraged banks at this point in time. We think that the French banks will all get a lift as “a rising tide lifts all boats”, but we are especially interested in Societe General. (SocGen) because of this, we are definitely wanting the market, and are cognizant of any type of announcement out of Madrid that could push the environment into a risk rally mode. However, we have been disappointed before and if the markets don’t get what they want – the bullishness could suddenly disappear.

 

CAC 40 Index Forecast October 17, 2012, Technical Analysis
CAC 40 Index Forecast October 17, 2012, Technical Analysis

Markets Witness Mixed Trading after IMF Cuts Global Growth for 2012

US dollar managed to incline against most of major currencies as a report came from The Daily Telegraph today saying that the IMF will downgrade the global growth outlook for 2012 to 3.3% from 4.0%.

The IMF sees a 2.2 percent contraction for Italy and a 1.7 percent growth decline for Spain, as economies are weighed down by fiscal austerity measures, The IMF also urged the European Central Bank to boost liquidity to stave off a deeper Euro zone crisis.

While on the other hand, some major companies and banks in U.S announced their earnings reports for the fourth quarter, where Google and General Electric failed to reach markets expectations, affecting the performance of Stocks during Friday’s session.

In Europe, CAC 40 dropped nearly 0.04%, while DAX inclined by 0.14%, while in US, Dow Jones rose nearly 0.23%, S&P 500 dropped by 0.32%, and NASDAQ declined by 0.34%.

In Currencies market, the euro declined against USD trading around $1.2909 compared with opening levels at $1.2967, as demand for Euro decreased today, while the pound rose trading at $1.5517.

The USD gained some momentum today trading around the 80.28 level, while the USD/YEN pair inclined to trade at 77.13. The AUD/USD pair jumped trading around the 1.0457, where gold dropped trading around $1653.24, and oil declined also trading at $100.29.

Profit Taking Ahead of the Weekend

Although Greece is closer to reach a an agreement with bondholders, Europe’s bond auctions were successful this week, and the US presented upbeat economic data and earnings yesterday, markets are retreating on profit talking operations ahead of the weekend.

In Asia, stocks advanced on easing worries over Europe, since the French and Spanish bond auctions were solid yesterday, pushing the yields down. Meanwhile the U.S. jobless claims fell to the lowest in almost 4-years and Morgan Stanly and Bank of America posted better than expected earnings.

Nikkei 225 rose 1.47% especially since sentiment was positive as Greece is getting closer to reach an agreement with bondholders over the size of the losses to avoid a messy default, while China’s manufacturing PMI might contract for a 3rd month, boosting chances for easing measures to support growth.

However in Europe shares opened lower today as caution dominated ahead of the Greek talks, with DAX falling 0.38% while CAC 40 fell 0.51%. European stocks entered an overbought area after reaching a five month high, while Google delivered the first disappointing results on weaker European demand.

Data today include the UK retail sales expected to improve, Canada’s CPI expected to shrink, and the US existing home sales expected to expand in Dec. Earnings today include General Electric Co., while Italy’s Prime Minister Mario Monti’s Cabinet will meet to pass a plan to boost economic growth.

As risk aversion intensified ahead of the weekend, the euro is weakening, trading around 1.2925 while the pound is trading with a slight downside momentum around 15470. The dollar index is stronger trading around 80.27. The yen is weaker trading around 77.22. The AUD is weaker trading around 1.0395.

As the US dollar regained some of its strength, downside pressures were imposed on commodities, therefore oil lost ground since today’s opening, trading around $100.30 from the highest of $102.04; while gold is slightly lower on profit taking, trading around $1650.25, yet heads for the 3rd week of gains.