The CAC 40 ended the session on Tuesday, September 4, up 4.24%, passing the 6,000 point mark to 6,039.69 points!
What is it based on?
Not at all, but the market is always right, even when it is wrong, because the market always wins over the creditworthiness of the individual investor!
The official explanation is that “European equity markets continued their rebound in early October, supported by falling long-term rates and cheap buyouts. After their sharp decline yesterday, long rates continued to weaken. The yield on the US 10-year bond fell 2 basis points to 3.61%, while its German equivalent fell 3 basis points to 1.88%.
So that’s the explanation, rates go from 3.63% to 3.61%, so the stock market is over 4%!
This is a joke.
We have just witnessed a significant redemption of short positions. In technical terms, this is a “short shorts buyout” and it has nothing to do with Bermuda shorts!
When you short sell a security you don’t own, you have to “deliver” it, so buy it for less than you sold it a few days ago. But when the market turns up, short sellers can quickly find themselves… in shorts, not to mention naked!
Therefore, these very strong increases are related to trend changes and short positions that are reduced in emergency situations to avoid serious losses. This is why we can say that strong declines cause strong increases, but this does not change anything involving the downtrend.
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