Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - CAC 40 & LVMH range bound. Was that the peak for both?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: LVMH is the biggest constituents in the CAC 40 Index. Both are short-term range bound but medium-term LVMH uptrend seems strong but is that enough to lift toppish looking CAC40 higher?
CAC40 peeped just above the previous all-time highs at around 7,385 but didn’t manage to close above.
RSI is showing divergence suggesting the uptrend is weakening and a correction is in the cards.
If CAC40 closes below the lower rising trendline and below 7,187 a swift sell-off down to support at around 6,946 could be seen
A close below that level CAC could be in for further downside. Next support at around 6,379.
Medium-term CAC40 has been trading in a steep rising channel since Q4 2022. Divergence on weekly chart suggests the uptrend is exhausting and CAC40 could face a correction.
However, a clear top and reversal pattern has not yet emerged but if CAC closes this week below 7,243 we will have just that. A close below the lower rising trendline could also be a signal of a correction.
A close above 7,400 will likely mean the uptrend is likely to continue higher towards 8K.
LVMH is short-term range bound between 830 and 775. Break out is needed for direction. A close below 775 could hit LVMH with a sell-off below the 55 daily Moving Average down to support at around 737.
However, medium-term LVMH is in an uptrend with no RSI divergence indicating higher levels are likely. The share price is trading in a rising channel and if LVMH closes above 830 share price would be looking at 885-930 level.
A bearish breakout of the channel i.e., a close below lower rising trendline – and below support at 775 – the correction picture could be unfolding. First indication of this scenario to play out could be if RSI closes below 60 threshold and its rising (blue) trendline.
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