The French election news have been in the spotlight for some time now. Last Sunday, LePen lost the first round, and many investors decided that the French stock market is the place to be. Or is it?
Marine LePen never had the lead in the opinion polls for the second round, and the difference she has to surmount in order to beat Macron is huge, 20%. Everyone keeps comparing the French election with the US presidential election and with the Brexit vote. In both cases, the difference between Clinton-Trump and yes-no was very small, unlike the difference between LePen and Macron. The chances of this nut head to be elected as the next president of France are indeed very small and they have been that way since the beginning. However, the day she was defeated in the first round, investors decided to go out and buy everything they could land their hands on. Banks were up more than 10%, while the main index, CAC40, more than 6%. This is pure irrationality, nothing has changed fundamentally, however stocks are on average 6% more expensive, after already having a 30% rally post Brexit. In my opinion, this is a by the book buying climax. Don't get me wrong, I am not calling for the end of this bull market, which is probably going to last for some time, if the world leaders don't escalate the tension in the middle east and N.Korea.
First target at 5000. Soft stop above the high.
Marine LePen never had the lead in the opinion polls for the second round, and the difference she has to surmount in order to beat Macron is huge, 20%. Everyone keeps comparing the French election with the US presidential election and with the Brexit vote. In both cases, the difference between Clinton-Trump and yes-no was very small, unlike the difference between LePen and Macron. The chances of this nut head to be elected as the next president of France are indeed very small and they have been that way since the beginning. However, the day she was defeated in the first round, investors decided to go out and buy everything they could land their hands on. Banks were up more than 10%, while the main index, CAC40, more than 6%. This is pure irrationality, nothing has changed fundamentally, however stocks are on average 6% more expensive, after already having a 30% rally post Brexit. In my opinion, this is a by the book buying climax. Don't get me wrong, I am not calling for the end of this bull market, which is probably going to last for some time, if the world leaders don't escalate the tension in the middle east and N.Korea.
First target at 5000. Soft stop above the high.
Trade closed manually:
The impulse failed to turn blue and the index kept going up ahead of the election. Closed on Thursday, however, I believe there is still a shorting opportunity up ahead.