The CAC 40 Index acted like it was shot out of a cannon on Tuesday, gapping higher and then closing at the very top of the range. At this point, it is probably one of the most bullish charts that I see right now, suggesting that France is about ready to take off. The gap was filled almost immediately, and now any type of bullish move above the highs of the trading session on Tuesday could very well signal that we are going to go much, much higher.
Having said that, do not be overly surprised if we pull back a bit in order to collect our thoughts. After all, it is not every day that the CAC gains 3%. Regardless, the only selling that I think you are probably going to see is going to be along the lines of profit-taking, because it has been such a massive, short-term move. Investors on the other hand will simply look at this is yet another sign that we are going higher over the longer term, so ultimately, I think that we will break above the €7200 level and continue to go much higher.
When you look at this chart, it is easy to see that the trendline did in fact hold the market up, and now the small gap that we broke out from on Tuesday is further backed up by the 50 day EMA at €6875 underneath. Furthermore, the 66 €35 level seems to be supportive as well, so I think all of this leads this market higher, especially as we continue to see European indices in general rally. The CAC has followed the likes of the DAX, MIB, and IBEX. Ultimately, indices around the world have recovered from the omicron scare, and I think the CAC will go right along with all the other indices, be they in the European Union or not. I have no interest in shorting and I look at any pullback at this point in time as a nice buying opportunity that offers value going forward. Keep in mind that the CAC is highly levered to luxury, meaning that we need a healthy risk appetite situation out there in order to see the CAC continue to go much higher. Ultimately, I believe that all-time highs are calling, and are probably calling much quicker than most people expect.
