In a repeat performance similar to what we’ve witnessed so many times over the past few months, the markets turned an early intraday 140 point gain of the Dow into a losing session starting the week on a negative note.
The losses were modest, so not much should be read into them. The driver for the morning rally was the Chinese announcement that it will loosen its currency peg to the dollar; not by a huge change, but at least it was interpreted as a step in the right direction after two years of being locked in a rigid position.
However, global debt problems surfaced later on in the day, the dollar rallied (supporting our long position) and south we went. Our domestic Trend Tracking Index (TTI) moved only slightly and remains +2.19% above its long-term trend line.
Upward momentum from last week’s rally seems to have stayed intact as all major indexes are remaining above their 200-day moving averages.