Sunday, April 5, 2009

CAC 40 (France) Chart Pattern - Apr 3, 2009

Last week I had discussed the FTSE chart pattern and how it was looking weaker than the Hang Seng and the Sensex. This week we will take a look at another Europen stock index, the CAC 40.

The 6 months closing chart pattern of the CAC 40 is also looking rather weak:-


(Please right-click on the image above and open it in a new tab or window for a better view.)

Unlike many other global indices, the CAC 40 never quite entered a consolidation pattern, except for the month of Dec '08. It has been continuously making lower tops and bottoms, and made a 52 week low in early Mar '09 before joining the global market rally.

But the rally looks a lot weaker with the volume spurt missing.  The CAC 40 has pierced through the 20 day EMA and 50 day EMA from below and is trading above both EMAs. The 50 day EMA is beginning to flatten and the 20 day EMA is trying to move above it.

All the technical indicators - the slow stochastics, MACD, ROC and RSI - are looking positive. But like in the Sensex discussion yesterday, both the ROC and the RSI have made lower highs while the CAC 40 was making a new high. This 'divergence' is likely to check the upward rally in the near term.

Note that the closing level made on Apr 2, '09 is almost 400 points lower than the highest close made in Jan '09. Contrast this with the Sensex close of Apr 2, '09 which touched the Jan '09 closing level.

Bottomline? In a globalised economy, action in stock markets in one geographic zone invariably has a reaction in a different zone. But after looking at the weaker FTSE and CAC chart patterns, it is becoming apparent that the Sensex outlook will be clearer by looking at the chart patterns of Hang Seng and TSEC (Taiwan).

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