The market will be in a âlong onlyâ scenario, but the question is whether or not that will happen by the end of the year.
The CAC 40 index fell slightly on Friday after closing the gap a few days ago. In doing so, it looks like the market is starting to stabilize, perhaps shaking off all the fear over the omicron variant announcement. Nonetheless, we have the 50 day EMA sitting at the 6873 level and turning higher. For this reason, I think the 50 day EMA will continue to be big enough for the market to pay attention to as a support. I think this is a market that will continue to attract buyers for dips, so value hunters will be a big part of what happens next.
On the upside, the â¬ 7,000 level offered some resistance during the day, but we hiked it enough times to think it is probably minor at best now that we have seen this move. Looking at this chart, it is very likely that we will continue to see a longer term bullish move, but that doesn’t necessarily mean it will be easy. Keep in mind that CAC tends to change based on luxury items, so we have to be very careful about whether there will be ârisk onâ or ârisk offâ.
If we were to fall below the 50 day EMA, it is likely that the uptrend line will come into play, and we are likely to see this area as a bit of a âbottom in the marketâ. On the upside, the â¬ 7,100 level is an area that has been resistance before so if we were to break through that level it would allow this market to soar. Whether or not traders are looking to seek gains until the end of the year is a whole different question, but I wouldn’t rule it out. The market will be in a âlong onlyâ scenario, but the question is whether or not that will happen by the end of the year. I suspect we probably will, but watch out for other stock indexes around the world to get a sense of how things are going. A side issue could be the fact that the EU has a few countries that seem likely to shut down.