close icon

CAC 40 Poised to Recover After Selloff

The recent market selloff spared no-one. Investors were reminded what fear was after stocks plunged sharply all around the globe. From the Dow Jones Industrial Average to the German DAX 30 and even in China, major benchmark indices suffered their biggest declines in years. Needless to say, French stocks tumbled, as well. The French CAC 40 index fell from 5538 to 5051 to erase five months of gains in just two short weeks for a total loss of 8.8%.

The question everybody is asking is whether this is the start of an even bigger crash or buying opportunity. The only thing we know for sure is that fear and panic would only make things worse. Instead, we rely on the Elliott Wave Principle to navigate us through this turbulent environment.
cac 40 elliott wave analysis
The chart above puts the recent selloff into Elliott Wave perspective. It looks like it is part of a larger running flat correction, labeled A-B-C. Wave A traveled in a slow and overlapping manner within the boundaries of a corrective channel down to as low as 4995 between May and August, 2017. Then, the bulls returned to lift the CAC 40 to 5567, which was its highest level in 10 years. Unfortunately, the rally between 4995 and 5567 was made up of just three waves, indicating the market was still in pullback mode and a five-wave impulse to the south should follow.

Today is February 13th and we can already count five waves within wave C down to 5051. If this count is correct, the entire A-B-C running flat correction is over. This, in turn, means the larger uptrend is supposed to resume towards a new high beyond the top of wave B at 5567. Even if it turns out wave C did not end at 5051 and the CAC 40 loses another 100-150 points, it would only mean the running flat has evolved into an expanding one. A slight breach of the 5000 mark would not be enough to invalidate the positive outlook.



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

S&P 500 Rallying Sharply, but Not Unexpectedly

S&P 500 bulls had a terrible October. The index was down 11% at one point, but managed to minimize the damage and finished the month down 7.3%. November, on the other hand, is looking a lot better, following a recovery of almost 100 points in the first seven days. President Trump’s reported request for a…

Read More »

DJ New Zealand Index Falling Off a Cliff

October brought a real bloodbath to stock markets around the world. The Dow Jones Industrial Average and the S&P 500 just turned negative for the year and equities in Japan, China and Germany are also falling in sympathy. While leading indices are plunging it’s no wonder that other countries’ benchmarks are suffering as well. The…

Read More »

Amsterdam Stock Exchange Index to Lose 20%

Similarly to the Dow Jones Industrial and the S&P 500, the Amsterdam stock exchange index, or AEX, has been in a uptrend since the end of the Financial crisis. Its journey to the north started from 195 in March 2009 and went on to almost 577 in July 2018. As of this writing, the Dutch…

Read More »

DAX Set to Lose Another 2000, Elliott Wave Suggests

The German DAX climbed to an all-time high of 13 597 in late-January. The benchmark had just exceeded the previous record of 12 391 set in April 2015 and the bulls were already bracing for even higher highs in the near future. Alas, it was not meant to be. As of this writing, the German…

Read More »

Dow Jones: Has the Crash Begun? Maybe

Historically speaking, October is one of the good months to be invested in the American stock market. According to Business Insider U.S. equities have mostly ended this month in positive territory, averaging 0.4% gain in the month of October since 1929. Not this October, though, and not for the Dow Jones Industrial. Excluding dividends, the…

Read More »

SPX: Do Not Miss the Forest for a Tree (Like We Did)

We show you how nailing the big picture is still not enough if you lose yourself in irrelevant details The SPX plunged 95 points or 3.3% yesterday. In this article we will tell you about a mistake we made, namely missing the forest for the trees, so you do not make it yourself next time.…

Read More »

Nifty 50 Bulls Unable to Stop the Bleeding

We published our last update on the Indian Nifty 50 almost four months ago, on June 6th, when the benchmark index was hovering around 10 550. Despite the recent selloff from 11 172 to 9 952, the Elliott Wave outlook was still positive. With the help of the chart below, we concluded the index is…

Read More »

More analyses