CAC40 (PX1) : Is the trading range going to hold?

CAC40 (PX1) - 14/08/19

Short Term trend: Neutral (50/100)
Long Term trend: Positive (90/100)

(scores computed by our proprietary algorithms - cf methodology)

Index profile

It should be noted that the top 10 stocks (which represent about 55% of the index) belong to very different sectors, unlike the DAX (overweight in industrial stocks) or the FTSE100 (pharmacy and financial), the CAC40 is indeed more composite in its sectoral composition.

However, three heavily weighted stocks, Total (9%), LVMH (8%) and Sanofi (7%) can influence the index according to their own fundamental factors, which represents a bias in values. From a sectoral point of view, we can see that the consumer goods sector represented by luxury goods and cosmetics such as LVMH or Loréal, is one of the most important for the index (20%) behind the industry (21%), ahead of financials (10%) or energy (10%).

The CAC40's values ​​are often world leaders with a very international exposure, with little dependence on the domestic market and with a fairly strong dollar sensitivity.

In 2017, the CAC40 achieved a performance of 9.3% which was more than offset by a -11% in 2018.

Since January 2019, the index is rebounding sharply (+ 12.7%), but is more and more volatile in the face of the accumulation of risks on global growth, linked to aggravation of tensions between China and the United States, the return of fears on Italy and a possible hard Brexit.

Instruments : CAC (Lyxor in Euro), C4D (Amundi in Euro), E40 (BNP Easy in Euro)

Technical analysis

Weekly data analysis

Weekly data show that the CAC40 index remains inside a trading range whose limits are located between 5600pts - the major resistance for several years - and 5200 pts. The lower bound of the trading range (5200pts) is further enhanced by the presence at this level of the EMA100. In case of bearish breakage of this support, the index could quickly reach the 4700 pts again. The week’s candlestick suggests a decrease in selling pressure and stabilization, which should encourage an attempt to rebound to 5450 points.

Daily data analysis

The daily chart shows a bullish reaction on the support, but that was cut in its tracks around the 5400pts. The index could return to retesting its support in the short term, but the continuation of the rebound then seems more likely, before a second downside attack occurs to break the support. The potential of this rebound seems limited at the level of 5420/5450 points with a potential of extension to 5490 pts.

Country breakdown

France 97%
Netherlands 1%
Luxembourg 1%
United Kingdom 1%

Sector breakdown

Industrials 21%
Consumer discretionary 20%
Consumer staples 13%
Energy 10%
Financials 10%
Health Care 7%
Materials 5%
Others 14%

Top Ten Holdings

Total 9%
LVMH 8%
Sanofi 7%
Airbus 6%
L'Oreal 5%
BNP Paribas 4%
Air Liquide 4%
Danone 4%
Vinci 4%
Safran 4%