Sometimes people need a reminder that markets go down as well as up. And traders won’t soon forget the day the Shanghai Stock Index tripped and fell, giving up 9% of its value, and triggered a sell-off that cost the Dow Jones Industrial Average 416 points. But traders seem to have walked it off.
Independent trader and system designer Art Collins expects the June Dow futures contract to trade back up to 12,700. “I don’t think that oil is going to rally; and the Fed is going to cut rates. The only fly in the ointment is that commodities, in general, are going up.” During April, he says support is at 12,130.
Resistance in the June Dow futures is at 12,505, says Larry Levin, president Secrets of Traders. “That was the low for December; and that resistance is so strong we will probably move to the downside for a while at least.”
He adds that 12,000 is the important psychological level that every technician is watching. “If we get below the 12,000 level, we will probably test 11,700. But they will find buyers down there.” The caveat, Levin says, is if the sub-prime lending problem gets worse or if the Asian markets tank, then there would be a lot of pressure to the down side.