By Nicholas Santiago on June 21st, 2010 3:30pm Eastern Time
Today the markets all rallied ahead of the open at the New York Stock Exchange on the possibility of the Chinese allowing the Yuan to appreciate instead of being pegged directly to the U.S. Dollar. While this is certainly a victory for the politicians that were pushing for this many traders including myself could not believe the market was in jubilee mode after that announcement last night. The stock market indexes behaved like it was a cure for cancer. It seems the only people that will benefit from this action will be the Chinese. The Chinese are currently looking to slow down their thriving economy and this should certainly help them do that. However, this does not help the U.S. or the U.S. consumer.
Today the U.S. Dollar Index has traded sharply higher throughout the day while the Euro currency has declined. This morning the Currencyshares Euro Trust (NYSE:FXE) was trading as high as $123.60 and is now trading lower by 0.56 to $122.80. As the Euro goes so goes the market indexes. Obviously when the Euro sells off the dollar will usually gain, and that is the case as the dollar is higher by 0.60 to $85.98. The popular Powershares DB U.S. Dollar Index (NYSE:UUP) is higher by 0.09 to $25.03.
While today's market volume is very light the reversal is brutal. The Powershares QQQ Trust (NYSE:QQQQ) was trading as high as $47.67 just after the open and it is now trading negative on the session at $46.60. That is a huge reversal on the QQQQ's intra-day. The NASDAQ composite was sharply higher earlier this morning and has now reversed lower by 24.00 points. At the time of this writing that is a 55.00 point reversal from the intra-day high to the current low in the NASDAQ Composite.
Reversals of this magnitude could lead to more selling especially after such so called positive news. Make the charts make the money. The news is for the birds once again.
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