40 år i branschen
185 800 kunder världen över
15 000 marknader

CAC 40 powers through G2 resistance

Price at time of writing – 4286.

My last update on France's CAC 40 was in early June, when my recommendation had reverted from buy to neutral, following a rise in the index that allowed profit to be taken at 4040.

That update also noted the strong resistance, led by the important G2 marker, which lay ahead at 4180. Recently, the CAC 40 has powered through that G2 resistance, an event that now allows me to project ahead to much higher targets. 

French president Francois Hollande has proven to be a positive surprise in the 18 months since his Socialist party swept to power. Having been elected on policies which included big tax rises on corporations and the wealthy, interference in investment-banking businesses, reducing the retirement age (at a time when other nations understood the need to raise the age) and in subsidised job creation, the economic prospects looked grim for France. However, common sense has ultimately prevailed and many of these policies will now not become enacted. 

President Hollande has been engaging on a global scale, with a willingness to commit France to counter-terrorism activities in Mali and Syria. In short, Mr Hollande has performed better than many might have predicted, and after years of underperformance, its stock market appears ready to reward the nation accordingly.

In breaking above the G2 level of 4180, the CAC has also shown a clean pair of heels to the resistance at 4108 –a level that represented a rise of 66.66% from the major low in March 2009, and which had kept the index in check since January 2010.  I can now project ahead to a level 100% above this low. Supporting this target area are no less than three percentages that derive from lows of lesser importance and together they form my new target band defined as 4910-4937.

Recommendation: Buy. Target 4930. Stop-losses can be activated on momentum below 4100.

CAC 40 chart

No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

Denna information har sammanställts av IG, ett handelsnamn för IG Markets Limited. Utöver friskrivningen nedan innehåller materialet på denna sida inte ett fastställande av våra handelspriser, eller ett erbjudande om en transaktion i ett finansiellt instrument. IG accepterar inget ansvar för eventuella åtgärder som görs eller inte görs baserat på detta material eller för de följder detta kan få. Inga garantier ges för riktigheten eller fullständigheten av denna information. Någon person som agerar på informationen gör det således på egen risk. Materialet tar inte hänsyn till specifika placeringsmål, ekonomiska situationer och behov av någon specifik person som får ta del av detta. Det har inte upprättats i enlighet med rättsliga krav som ställs för att främja oberoende investeringsanalyser utan skall betraktas som marknadsföringsmaterial. 

Artiklar av våra analytiker