Weekly Indices Forecast – NASDAQ 100 Index, S&P 500 Index,CAC 40 (17-21 June 2024)

NASDAQ 100 Index

After a new record high was reached during the previous week, the NASDAQ 100 Index made a strong gain last week, due mainly to lower-than-expected US CPI data which makes an earlier rate cut a bit more likely. Strong earnings by major tech companies are also helping the Index.

Bulls should be encouraged by the fact that this Index is trading in blue sky at a record high, and that last week’s close was right on the week’s high, with strong momentum showing over both the short and long term.

It makes sense to be bullish on this major stock market index when it has recently made a new record high. Historic precedent shows this tends to produce further gains quickly.

I therefore see the NASDAQ 100 Index as a buy.

S&P 500 Index

After a new record high was reached during the previous week, the S&P 500 Index made a strong gain last week, due mainly to lower-than-expected US CPI data which makes an earlier rate cut a bit more likely.

Bulls should be encouraged by the fact that this Index is trading in blue sky at a record high, and that last week’s close was quite near the week’s high, with strong momentum showing over both the short and long term.

It makes sense to be bullish on this major stock market index when it has recently made a new record high. Historic precedent shows this tends to produce further gains quickly.

I therefore see the S&P 500 Index as a buy.

CAC 40

The Parisian index has had a very rough week, dropping over €400 from the open on Monday. At this point, the CAC 40 seems to be testing the €7500 level for support, therefore I think you have to look at the market through the prism of possibly offering a bit of value. If we do in fact rally from this point, it will have ended up being a massive buying opportunity that a lot of people will have taken advantage of. However, if we were to break down through here, then the €7200 level could be your next target.

Bottom Line

I see the best trading opportunities this week as follows:

• Long of the NASDAQ 100 Index.
• Long of the S&P 500 Index.
• Long of the CHF/JPY currency cross.
• Long of the NZD/JPY currency cross.

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#DAX & #CAC40 Forecast (5 June 2024)

CAC Forecast: Continues to Focus on €7900

• The Parisian CAC fell significantly during the trading session on Tuesday, but he continues to see support in the same general vicinity, namely the €7900 level.
• Because of this, I do think that we have a situation where traders will pay close attention to whether or not this level holds, as it is a large, round, psychologically significant figure, and of course it’s also an area that has already been tested multiple times.
• That’s the reason why I will be watching very closely.

Are We Still Range Bound?

I think at this point in time, the market is still trying to question whether or not we are range bound, and I do think that the next couple of sessions could be a pivotal turn of events for the market, and therefore we need to pay close attention to what happens next. Ultimately, this is a market that will have to make a decision, and the fact that we have the European Central Bank with an interest rate decision coming up in the next couple of days means that we are going to see a lot of noise. At this point in time, we could see some type of huge decision made, and once it’s made, we can put money to work.

If we were to break down below the €7900 level, then the market could go falling toward the 200-Day EMA which is closer to the €7700 level. On the other hand, if we turn around a break above the 50-Day EMA, it could open up the possibility of a move to the €8250 level, an area that has previously been resistance, and therefore I think you need to look at that as the potential top of the overall range.

All things being equal, I think you continue to see a lot of noisy behavior of the next couple of sessions, and therefore I think you need to also look at it through the prism of whether or not we get any type of momentum. Ultimately, this is a market that will make a bigger decision soon, and I will be following which of her direction it breaks.

DAX Forecast: Falls to Find Support Again

• The DAX had initially fallen during the trading session on Tuesday, but it does look like the 50-day EMA is trying to hold things together.
• The 50-day EMA sits just above the 18,250 euro level, an area that has been important more than once.
• So, I think it all ties together quite nicely for a potential move to the upside.

Caution Continues to Be the Way

At this point, I think you’ve got a scenario where traders will continue to be very cautious, but they will recognize the fact that the market is likely to be very erratic, but positive over the longer term. The ECB is likely to cut rates either this week or maybe at the next meeting. And I think a lot of traders out there are trying to bet on that. If they do not cut rates, then it’s possible that the volatility could be extreme this week, but all things being equal, the uptrend is still very much intact.

Even if we were to break down below the 18,250 euro level, the 18,000 level would be a major support level as well. In general, this is a market that I think continues to see a lot of buy on the dip attitude. I do think that the prize is to be found closer to the 19,000 euro level.

Breaking above there, we could see a move all the way to the 20,000 euro level. Keep in mind that the DAX represents Germany, which of course is the biggest economy in the European Union. So, this will be the first place that people put money to work when trying to invest in the continent. I like the overall trend. I just recognize that it might be noisy for the next couple of sessions.

Because of this, I think you are probably better off waiting to see whether or not we can get momentum to the upside that you can follow. Shorting this market is all but impossible, at least not until something drastically changes. It looks as if the DAX will continue to be positive, but with the volatility that we can expect, you may be better off just waiting.

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#DAX & #CAC40 Forecast (4 June 2024)

DAX Forecast: Gives Up Initial Gains on Monday

• The DAX initially rallied during the trading session on Monday, but then melted down after the PMI miss in the United States has everybody banking on the idea that the economy is going to collapse, and we will all be dead in a week.
• Obviously, this is hyperbole, but at the end of the day, that’s essentially how the market is behaving.
• With that being in mind, I think that those who are going to be a bit patient will probably be rewarded for that patience.

DAX Will Lead the Way

The DAX will lead the way for the rest of the European indices, and I think you should continue to look at the DAX as the “bellwether index” for the European Union. After all, Germany is by far the biggest economic engine on the continent, and I think a lot of people will look at it through that prism. With this, I like the idea of buying the DAX on these dips, because I do think that it is probably only a matter of time before people start focusing on the idea of Germany and the rest of the European Union exiting a recession.

You should also keep in mind that war is an excellent profitable opportunity. While it is callous to say this, the reality is that the European Union will continue to get a bit of an economic boost from the war in Ukraine, as it helps with the military industrial complex, and of course a lot of exports. Governments are spending massive amounts of money on armament orders, and of course the idea that the economy is going to continue to benefit from government spending overall, and therefore I think you will continue to see a lot of inflation of asset prices. After all, that’s the only game the central bank is not a play, and therefore one would assume they will continue to go back to that playbook.

Underneath, if we were to break down below the €18,250 level, I think at that point in time you will have a lot of people looking for support, right along with the €18,000 level underneath that. In other words, this remains a “buy on the dips” market.

CAC 40 Forecast: Falls to Kick Off the Week

• The Parisian CAC 40 has initially tried to rally during the early hours on Monday but has given back up the gains rather quickly, as the market has struggled with the 50-Day EMA, and of course we have a major situation where traders are looking at this through the prism of whether or not the support holds.

That support, the €7900 level has been very important multiple times, I think that will continue to be the case going forward. As long as we can say above the €7900 level, I think there is a real shot at going higher over the longer term. That being said, if we were to break down below the €7900 level, then we could see the market dropping down to the 200-Day EMA, closer to the €7700 level.

CAC Means Luxury

When you look at the Parisian CAC, you are more or less looking at an index of luxury brands. While a shrinking euro has a major influence on exports, it’s also worth noting that this is a statement on the state of the wealthy in the European Union and beyond. At this point, it looks like the wealthy are still doing fairly well, and as long as that’s going to be the case, a lot of the companies on the CAC 40 will continue to benefit.

Looking at the chart, we are just simply in the consolidation area between the €7900 level underneath, and the 8250 euros level above. I think this continues to be the case, and quite frankly I don’t have any interest in shorting this market, or any other index at this point due to the fact that it’s likely central banks around the world will continue to look toward loosening monetary policy. Speaking of which, the European Central Bank is almost certainly going to be cutting soon, perhaps even as soon as just a few weeks are now. That should continue to boost European stocks in general, and then by extension the CAC in Paris.

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