US Stocks Negatively Reverse After China's Currency Becomes More "Flexible"
Monday, June 21, 2010
Stock Market Rally:
The major averages negatively reversed (opened higher and closed lower) after The People’s Bank of China pledged on June 19 to make the yuan more flexible. As expected, volume totals were reported lower on both major exchanges due to Friday’s quadruple witching day. Decliners led advancers by a 22-to-17 ratio on the NYSE and by a 2-to-1 ratio on the Nasdaq exchange. There were 50 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 33 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
China Allows Its Yuan To Be More “Flexible”:
Overnight, Asian and European equities soared after China said it will allow its currency, the yuan, to be more flexible against the US dollar. Since the 2008 financial crisis, the yuan has been artificially pegged to the US dollar to protect Chinese exporters. During that time, a slew of Western governments, including the US, have pressured Beijing to remove the onerous peg but each time Beijing has dismissed their requests. It is important to note that China’s economy is experiencing explosive growth and Beijing has taken several key measures in recent years to curb that robust growth. Allowing the yuan to be more flexible is simply another calculated measure to achieving that goal.