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:

Dow Jones at Risk of Losing 2000 Points

It has been almost four months since the last time we examined the Dow Jones Industrial Average on March 29th. The benchmark index was still unable to recover from the sharp plunge to 23 360 in February. And while many hurried to declare the death of the post-2009 bull market, we instead decided to take…

Read More »

Greece is Better and Elliott Wave Confirms It

History was made last week, when Greece and its euro zone partners made a deal on the country’s debt. Under the agreement, Greece has been granted a 10-year debt maturity extension and will not have to make any debt payments until 2032. While both sides see the deal as a win, some think it simply…

Read More »

Swiss Stock Market: Is the Bull Run Over?

It has been over nine years since most stock market indices around the world declared the end of the Great Recession in March 2009. That was when the DJIA and the S&P 500 in the U.S. and the German DAX started recovering from their respective crashes. It was March 2009 when the Swiss stock market…

Read More »

Elliott Wave Strengthens DAX 30 Bullish Outlook

It has been over four months since we last wrote about the German DAX 30. The blue chip index was trading around 12 700 following a sharp selloff from as high as 13 602. However, despite the fact that this plunge looked quite scary, the Elliott Wave Principle suggested that “it looks more like another…

Read More »

Nifty 50 Still On Track for a New High Near 12 000

In mid-April the Indian benchmark stock market index Nifty 50 was trading near 10 550 after a recovery from a two-month plunge between 11 172 and 9952. Despite the recent pullback, the daily price chart suggested the uptrend was still in progress and the bulls should eventually be able to reach a new all-time high…

Read More »

Dollar Index, Hold Your Horses (Bulls)

Three months ago, while the dollar index was trading below the 90.00 mark following another selloff, we published an Elliott Wave analysis suggesting the bulls were ready to stop the bleeding and lift the index to the resistance area of 95.00. The chart below was what led us to conclude a bullish reversal was on…

Read More »

FTSE MIB: What Happened to Italy’s Stock Market?

It was a bad month for Italian investors. The country’s benchmark index – FTSE MIB or Milano Indice di Borsa – crashed from its May 7th high of 24 544 to as low as 21 122 yesterday on fears that the fourth largest economy in the European Union is on the brink of a full-blown…

Read More »

More analyses