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Hugo in HTO Trading,

CAC40: Holding at a weekly support

The CAC40 weakness came amid losses on major European, US  and Asian equities markets as the cloudy US jobs data added to worries about China’s economic slowdown and financial turmoil.

French consumer confidence held steady in August, defying economists’ expectations for an increase, figures from the statistical office INSEE showed. The consumer confidence index came in at 93.0 in August, while economists had expected the index to rise to 94.0.

France’s flash purchasing managers’ index (PMI) was 51.3, but on Thursday that got revised way down to 50.2 — more or less stagnation and dangerously close to slipping into decline. The French industry is shrinking faster than expected. The service sector is similarly in a worse shape than economists expected — the PMI there was just 50.6, against a forecast of 51.8.

The Index fell 0.5% since the start of the month and rose 6.0% year to date and is in a well-defined distribution phase. Last week, CAC40 initially rose but found enough resistance at the 50-week moving average giving back all its gains and closed near the low of the week, on a narrow range, creating an inside week. The stochastic is showing a bearish momentum and is below the 50 mid line.

Expecting a downward move to a key level at 4,225 on a break below previous week low at 4,482 (scenario 1) or a break above previous week high at 4,693 may push upward the Index to a weekly resistance at 4,975 (scenario 2).

Fra40 is a CFD written over CAC40 futures.