CAC Forecast: CAC Looks Ready to Continue Falling
Play it safe, play it smart, but I am certainly going to play it to the downside going forward.
The CAC 40 Parisian index has initially tried to rally during the session on Monday but gave back gains rather quickly. We have seen stocks around the world take a little bit of a beating, and rightfully so. The US dollar has destroyed almost everything in its path over the last several days, and I think it’s probably going to continue to be rather brutal. I like the idea of feeding short-term rallies, that show the first signs of exhaustion.
CAC 40 Drop to EUR5500 Possible
The Parisian index is highly levered to luxury goods, and most of the goods that are produced on this index are sold in the European Union. Quite frankly, the European Union is a bit of a basket case at the moment, so I do not have any interest whatsoever in trying to “pick the bottom” in the economic situation. I’d rather short signs of exhaustion after short-term rallies, or simply sell a breakdown of the lows. I think the CAC could really start to unravel in the short term, and it goes looking for EUR5500 level quite easily.
The EUR6000 level above is an area that I would expect act as a bit of a “ceiling in the market”, and any attempt to get above that will almost certainly be repudiated. The overall attitude of the market will continue to be one that is based on fear, but keep in mind that bear markets do have some of the most vicious rallies. In other words, you don’t just simply short with a huge position at this point because you feel that the markets going to continue going lower. He could very easily bounce 2% before selling off again. Short selling is a bit of an art form, especially when it comes to stocks and indices, and you need to be somewhat nimble.
The most important thing you can have is going to be experience, but until you get experience, you need to trade smaller size, because the devastation that can occur if you get it wrong with a huge position can be absolutely devastatingThis is especially true once the market turns around and starts falling again, which is almost certainly going to be the case after any bear market rally.Play it safe, play it smart, but I am certainly going to play it to the downside going forward.
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