Charts show France's blue chip index CAC 40 index's 50-day moving average crossing below the 200-day moving average in early trading on Tuesday, a strongly bearish technical signal called 'death cross', which usually means further losses in the index six months down the road.
"The trend is clearly negative, and all the tentative rebounds are quashed, just like yesterday when the CAC 40 ended the session with a tiny gain after rising by as much as 1.1 percent," says Franklin Pichard, director at Barclays France.
"The next targets are: the Nov. 28 gap, at 2,871 points, and then the zone around 2,800 points," he says.
The CAC 40, home of bellwethers such as oil major Total and the world's biggest luxury goods maker LVMH, is up 0.5 percent on Tuesday morning, at 2,969.29 points. The benchmark index has plummeted more than 20 percent since mid-March, a threshold seen by analysts as 'bear market territory'.
A similar 'death cross' was triggered on the euro zone's blue chip Euro STOXX 50 last week, with the index losing 3.9 percent since then. The benchmark has also recently entered 'bear market territory', down 21 percent since mid-March.
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