The DAX index is hovering near its all-time high ahead of earnings by some of its biggest constituent companies like Henkel, Volkswagen, Adidas, BMW, Munich Re, and Heidelbergcement. The index is trading at €15,246, which is slightly below €15,480.
What’s happening: The German DAX has recently rallied as investors react to the recent earnings from big American and European companies like Microsoft, Apple, and Deutsche Bank. These results have shown that the corporate sector is doing relatively well as the world economy recovers.
Indeed, according to FactSet, about 60% of all companies in the S&P 500 index have published their results so far. Of these, 86% of them have published results that are better than estimated. This is the highest reading since FactSet started compiling the data.
Still, the biggest challenge for some major DAX index constituents is the ongoing chips shortage that is affecting companies like Volkswagen, BMW, and Daimler at a time when demand for cars is rising. We will get more details about this shortage when Volkwagen releases its results later this week. Other companies in the index that will release their reports are Henkel, Munich Re, and Infineon.
DAX index forecast
The daily chart below shows that the DAX index has found a strong resistance at its all-time high. The index is still being supported by the 25-day and 50-day exponential moving averages (EMA). Also, it has formed a small head and shoulders pattern that is usually a bearish sign. The index is also slightly above the ascending red trendline.
Therefore, in the near term, we could see a short-term pullback as traders digest results from key German companies. This pullback will be confirmed if the price manages to move below the ascending trendline and the 25-day EMA.
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