France’s benchmark CAC-40 stock index is breaking out to 10-year highs.
We’ve noted in recent weeks a slew of European stock bourses (e.g., Norway, Italy, Finland) breaking out, or attempting to break out, to new long-time highs. You can now add France’s CAC-40 Index to that list as it is breaking out to new 10-year highs this week.
Related Post: September 1, 2017: Key Line Saves French Stocks From Further Damage (PREMIUM-UNLOCKED)
This breakout is no surprise for TLS members as we’ve been expecting it for some time. But what’s next for French stocks? Let’s get one thing straight — a breakout to decade highs is not a bearish development. But what is the potential here?….and what’s the best way to play it? An important component of those answers lies in the proximate cause of the breakout.
It’s no secret that the recent deterioration in the Euro has put a bid into the Eurozone’s stock markets. Thus, should the budding rally in the U.S. Dollar continue further, it could very well be a tailwind for Eurozone equities — though, not necessarily for U.S.-based European equity funds. The currency effect can act as a major drag on whatever gains do accumulate as a result of equity price gains. A quick comparison of the CAC-40 versus the iShares France ETF (EWQ) will make that point quite clear. So don’t be surprised if your position in EWQ fails to keep pace.
For more on how to take advantage of these breakouts in Europe, or if you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Plus, our SPRING SALE (25% OFF!!) is going on now so it’s a great time to sign up! Thanks for reading!
Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.