CAC Forecast: Reaching Top of Overall Trading Range

The Parisian CAC Index rallied quite nicely on Wednesday to reach towards the €7050 level, which is an area that has been important multiple times. We did close at the top of the range though, so that suggests that perhaps there may be an attempt to break out. I suspect liquidity could be an issue though, so will have to wait and see. If we start seeing sudden selling, then I might be willing to short this index, but I would not do so with a huge position.

If we turn around and take out the €7100 level, then I think that the CAC will head towards the highs again. Longer term, I think that is what will happen regardless. This is a strong and stout looking chart, but the only reason that I think we may not be able to break above the resistance just above current pricing is that it is a couple of days before Christmas. Because of this, you need to cut down your position size because if we get a sudden spike in the markets due to a lack of liquidity, you can get damaged really quickly. Nonetheless, Paris has been one of the better performers this week, and at this point in time it shows no real proclivity to fall, although the trade I was talking about earlier in this article was more or less going to be a short-term “smash and grab” type of attempt.

Longer term, I do believe that the CAC will go looking towards the €7400 level, but that is something that we will see in January. The European Central Bank has recently just acknowledged inflation, but they have not really been willing to do anything about it. As long as that is going to be the case, that loose and easy money is going to find its way into the stock market, and the CAC is the second biggest index on the continent. With this, I do believe that 2022 will be a good year for the CAC, at least for the first quarter. Whether or not it can maintain that is completely different, but I do not see any reason to think that we are on the precipice of some type of major meltdown. I would say that about almost every stock index that I follow.