The underlying trend remains bullish

2014-04-03 - Written by Guillaume Bayre (Le Figaro)

Interview – Over the last two years, Jean-Charles Gand has closely predicted the evolvement of market trends. As a technical analysis specialist, Jean Charles anticipates a consolidation phase over the next few months before a recovery in U.S indices. Market strategist for BBSP, an independent financial research firm, Jean-Charles Gand is also the General Secretary for AFATE, the French Association for Technical Analysts. Former Head of Technical Analysis at Société Générale Asset Management, he is one of the most frequently mentioned technical analysts in Paris.

LE FIGARO BOURSE – Through thick and thin, Wall Street has reached a new all-time high. Should we fear the end of this bullish wave or could this movement continue?

After the previous interview that took place in March 2013, I mentioned a potential progression of 15% for the Dow Jones on the basis of an index which undercut 14,450 points, or a potential target to reach 16.600 points approximately within six to twelve months. This index reached a high of 16,588.25 points on the 31st of December that suggested a precise progression of 14.9%. This objective was achieved. Does this mean that there is no potential for a further increase? No, the thresholds of 18,400 or even 20,500 points remain insight for a medium-term focus as long as the DJIA remains above 13,300 points. Currently, major stock market barometers are showing divergence; the S&P500 just recorded a new all-time high, as did the S&P Small Cap 600. Whilst the Dow Jones Industrial Average has not recorded a new high since the 31st of December 31st. In fact, this key Wall Street index has started out the year “in-line” with its seasonal tendency, for a Mid-Term year of the US Presidential cycle. This is the assumption for the first half of 2014: the Dow Jones index should fluctuate within a horizontal channel with alternating downside and upside accelerations. This consolidation is in response to the previous 5 years of uninterrupted appreciation. This phase of digestion should endure for a further 6 months before the underlying upside trend resumes its course, from next autumn onwards. Therefore in 2015, indices should approach with good provisions...
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