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Sentiment in Europe remained positive as the major stock indices extended their recent gains, with the DAX hitting yet another record high to become even more technically overbought. The gains were led by shares in defence companies on the likelihood of greater military spending in the EU, which could force governments to raise borrowing in the coming years. Hence, bond prices fell as yields on German, French, and Italian bonds climbed noticeably. With the US out for a holiday, the focus remains firmly on European markets today, where stocks have been surging lately thanks to Trump pushing for a swift resolution to the Ukraine war. But have the markets got ahead of themselves with all this optimism? This DAX analysis shows the German index is now at extremely overbought levels, which calls for caution.