CAC, IBEX and MIB Forecasts – European Indices Trying to Extend Bounce

CAC (France) Technical Analysis

The CAC in Paris fell to kick off the trading session but we have turned around trying to recapture the 8,000-euro level. Fairly solid industrial earnings coming out of France have helped the index, but we are still very much in a bit of a consolidation area, and I think that continues to be the main story here.

The 200-day EMA sits near the 8,077-euro level, and failure to break above that means that we stay in consolidation, perhaps even start to break down a little bit. If we can break above the 200-day EMA, then it opens up the possibility of a move to 8,200 euro.

IBEX (Spain) Technical Analysis

The IBEX in Spain is seeing quite a bit of banking sector outperformance and therefore offering some support at the 17,000 level. The Spanish banks have beaten estimates for 12 consecutive quarters, which makes this almost thought of as a purely financial index.

The index remains 8% or so off its February highs as investors price in Spain-specific political risk and the potential impact on domestic consumption. The support at 17,000 does seem to be firming, so pay attention to this as a potential mover that could have a knock-on effect throughout Europe.

MIB (Italy) Technical Analysis

The MIB in Italy is seeing defense and financials rally a bit as Leonardo has surged 17% year-to-date, acting as one of the major industries driving the MIB overall. Improved bank profitability and strong trading businesses have helped the MIB outperform some of its northern neighbors on a relative basis today.

The market is testing the 44,800 level. If we can break above there and then break through the 50-day EMA that more likely than not will be a sign that more momentum is entering the market. MIB looks like it is trying to turn things around for a longer-term move and it is an index I’ll be watching.

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