F40 buy

Good time for the CAC40 rise

23 june 2022 15
Volkov_Anton
Volkov_Anton

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Agricultural commodities"
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French stock market index CAC40 fell to March minimums. Here the decrease has stopped, the main negative news of June has already been taken into account in quotations. "Bulls" have a good opportunity to take advantage of temporary calm and win back at least a part of the incurred losses.

 

There are 2 stock market anomalies at a time in favor of CAC40 growth: half-of-the-month effect and turn-of-the-month effect. Research has shown that the second half of the month is much more beneficial than the first one for the French index. This trend was confirmed in May: after the decrease by 0.8% in the 1st half of the month the index increased by 1.5% in the 2nd half. During the 1st half of June the decrease reached 6.4%, the 2nd half of the month is still demonstrating a downfall of 2.7%, there is a clear potential for the upward rebound during the remainder week.

 

Talking about the turn-of-the-month effect, it was clearly visible with the last 3 changes of the months, even in spite of the steady falling trend of the world markets. In case of CAC40, buying the index in a few days before the end of one month and selling it at the beginning of the next month brings an average return of 0.61%.

 

On the technical side, the CAC40 is in a small flat after the 11% decrease wave from the June maximum. The blue line of the Stochastic indicator fell into oversold zone, rebounded and crossed the red line from bottom to the top, signalising a high probability of growth in the nearest future.

 

The rebound targets are the May minimum around 6065 and the gap formed on June 10 at 6170. It is possible to open a position at the current price or wait for Friday: a risk-off before the weekend may bring the CAC40 even lower, to the level of 5800.

 


The following trading strategy options can be offered:

 

1)     Buy CAC40 today at the current price. Take profit 1 - 6065. Take profit 2 - 6170. Stop loss - 5800.


2)     Buy CAC40 on Friday (not lower than 5800). Take profit 1 - 6065. Take profit 2 - 6170. Stop loss – 5750.

 

Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.

Volkov_Anton
Volkov_Anton

Listed among the best MarketCheese authors
1st in the segments "Currencies" and "Agricultural commodities"
2nd in the segments "Indices" and "US stocks"
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