Medium-term Update

Two possibilities:

1. USD up move is a three wave correction which is now over or will be over soon. This is bullish for equities. This means that 1041 was the low, OR that the low will come soon -- maybe around 1020.

Or

2. The EURUSD is in the midst of a 5-wave downturn, which will extend much further. This means that equities (ES) should correct to a minimum of 950.

Considerations:

1. Greek Bailout: This should mean a spike in the EURO which could be bought and then shorted, if not for the LT, at least for the ST. Buy 1.37. Sell 1.38 or so. Lots of resistance at 1.38. Max upside for now should be 1.385.

2. TNX: Ten-year rates are rising, have to rise, will rise. 200 MA is rising. This is a bull-market. This means that equities are also in a bull market, and thus, that EUR-USD is probably in a bull-market. Be careful shorting the EURUSD.

3. EUR- USD has almost had it's oversold bounce. We're not going up much more without a correction down, perhaps to 1.3300 (1.318 of previous wave), which may be the bottom. If this happens, equities have to move down to 1020 or so.

4. Best guess: EUR/USD moves up to 138 or so, then down to 133 or so, which may be the end of the down move.

5. AAPL is not looking too healthy right now and could use a trip down to $170 or so. GOOG would be a terrific buy at $500. BKX is looking like it wants to go down.

6. However, look also at PMs. SLV may be about to bottom. If so, the USD may have already topped. If the USD has topped, then we may have seen the bottom in the EUR/USD.

7. Waning moon = bullish for equities. Lunar cycle implies top around 2/14 (Monday?) bottom around 2/28.

8. At the moment, the rate hike picture looks most bullish in the U.S. This points to further strengthening in the dollar, which implies weakness in the EUR/USD. This does not necessarily imply weakness in equities, in the long run. Remember that equities often go up with rates. As growth projections rise, rates and equities rise. If growth projections in the U.S. are higher than those elsewhere, then the dollar and equities can both rise. It happened in early 2010, from 1980 to 1982 and 1987 to 1989 and it can happen again. This would be bearish for PMs.

The picture should become clearer in the next couple of days. For now, assume that the ES will bottom either at 1020 or 950 (or both) and that EUR/USD will bottom at either 133 or 130.3.