DAX trading

Posted on 1st dec with the dax at 5270.I think it`s got well ahead of itself
21 trading days later we`re at 5400 unless he then revises it once it reaches 5500 .I think we`re looking at a sharp correction in German equities at the current rate

FRANKFURT (AFX) - The German DAX 30 index should continue its recent upward trend next year as rising corporate profits in 2006 and 2007 gives it a boost, HVB strategist Gerhard Schwarz said in a note.
Schwarz noted that HVB's company analysts expect an increase in earnings among the DAX (Xetra: news) companies of 5 pct in 2006 and 8 pct in 2007 based on expectations of an economic upswing.
'Given the still moderate valuation of German equities and a persistently favourable interest rate and liquidity environment, we therefore see scope for a further rise in the DAX,' said the strategist.
However, he added that while the positive momentum of equity prices in recent months should continue in the first quarter, he expects the German equity markets to start trading sideways in the second quarter, for several months.

Schwarz has set a new six-month target of 5,500 points for the DAX, adding that there could be further upside if the expected global economic upswing proved to be more robust that expected.