While the media focuses on the unrest on the streets of Franceđ«đ· the real crisis is unfolding silently in the bond market.
This isnât an inflation problem itâs a liquidity and structural trap. Foreign institutions hold over 50% of French debt. Because France is stuck in the Eurozone and cannot print money, it is completely exposed to capital flight. If these foreign liquidators ramp up their dumping over the next few weeks, the situation could spiral. The bond market is already starting to price in a default risk or a massive EU bailout.
But look at the charts: the technicals on the CAC 40 are deeply concerning.
The last time I flagged a rising wedge like this, Bitcoin was peaking at all-time highs before a historic, account eroding collapse.
Now, the exact same pattern has triggered on the CAC, and the floor just broke.
Pay close attention.
Theyâre not for everyone, but Iâm a huge proponent of moving averages. My system is built around them.
Theyâre pure, they donât lie. Youâre either above rising ones, or below declining ones.
They help:
- To keep you on the right side of the market
- To keep you out of trouble
- To keep you avoiding downtrends
- To keep you in big winners
I truly believe they are the ultimate tool to filtering noise.
Which is why when indexes and leading stocks start breaking below them, is the only thing you should be listening to.
They can also help you identify leadership. Look at cyber security stocks above all their moving averages whilst you have $QQQ under the 50 day moving average.
Iâm not pushing anything or insinuating that this is the only way to apply technical analysis, but itâs really helped me eliminate noise and build a consistent approach.
$DDOG - knock knock knock.
Countless tests of the supply line.
If the software strength is going to be real and sustained, hard to see this beast not ripping out.
It feels dangerous out there.
Yes, banks, healthcare etc is holding, but is that what you really want to trade?
Iâd rather go fishing.
When tight areas, in GOOD sectors get hit, thatâs a big warning shot.
$GH