The CAC did very little on Monday as the markets in general will be very quiet during the last week of August. After all, it is the height of vacation season, and a lot of traders are away from their desks. That being said, the 50-day EMA underneath has been rather crucial, offering quite a bit of support. Underneath there, we also have the uptrend line, so it is likely that the market will find plenty of buyers underneath.
The 6500 level underneath would be a large, round, psychologically significant figure that a lot of people pay attention to, so I think it is only a matter of time before all things line up and the buyers come back in. To the upside, the market breaking above the recent consolidation area near the 6700 level could open up the possibility of a move towards the highs yet again. If we were to break down below the 6500 level, then it opens up the possibility of a move down to the 6400 level.
When you look at the CAC, you have to keep in mind that it is highly levered to luxury brands, and of course Airbus. This is a market that I think comes down to the overall risk appetite of traders, so it will continue to find buyers. To the upside, the 7000 level could be a target, as it is a large, round, psychologically significant figure, and could cause quite a bit of noise and frustration. If we break above the 7000 level, then it will simply be yet another milestone that we have broken through.
To the downside, the 200-day EMA sits above the 6100 level, and offers a significant support level in the sense that a lot of longer-term traders pay close attention to it. The market will continue to find plenty of value hunters on dips, as we find plenty of opportunities based upon the fact that central banks around the world continue to flood the markets with liquidity. When you look at the chart, you can see that every time we have pulled back a bit, there have been plenty of value hunters jumping in and I expect that to be the case going forward.
