For the German DAX, top-down equity strategists at Commerzbank regard the current levels of above 15,000 as an overshooting, expecting the year to end at 14,200. Meanwhile, the technical analysis team currently expects a consolidation for the DAX, while the year-end is seen at 15,500-16,000.
In the short-term, three DAX key bull trends remain in place
“The attractive DAX dividend yield of 2.9%, the 9% rise of DAX 2021 earnings expectations and the powerful 13% eurozone M1 money growth are key bull trends why the DAX might rise to 16,000 until the Q2 DAX earnings season in August 2021, after a short-term DAX consolidation in May and June.”
“But the euphoric investor sentiment with low put-call ratios, the elevated DAX price-to-book ratio of 1.7x, the persistent increase of inflation expectations and the lacklustre 7% M1 money growth in China warn investors that the DAX volatility is set to strongly increase in the coming quarters. We expect the DAX to trade lower at 14,200 index points at the end of 2021.”
“Due to the overbought technical situation a consolidation is now under way. The technical target for end of 2021 remains unchanged at 15,500 to 16,000 points.”