The Euro appears to be in free-fall as Greece threatens to exit the Euro (GREXIT). The question is, who has the most leverage and who will be hurt the most if a default on Greek bonds is made?.

There are 20 days left until the Greek general election, which corresponds nicely to a Primary (panic) Cycle coming to a close at the end of January. A Master Cycle low is also due then, possibly Intermediate Wave (3).

But another Master Cycle low is due in mid-March [Wave (5)?], so the reprieve, if any, may only be temporary.

The Cup with handle formation is a close relative of the Head & Shoulders formation, but with no left shoulder. If we were to calculate the target for the Head & Shoulders, it would be 104.07. For now I am assuming that the Head & Shoulders target would be a proper target for Intermediate Wave (3), while the Cup with Handle target would be appropriate for Intermediate Wave (5).

The FOMC minutes were released at 2:00 pm with no particular fanfare. The effect on the equities markets was muted at the announcement, at best. The only admission of any consequence was the observation that front running the Fed is usually what moves the markets prior to the release of the minutes.

A MarketWatch headline claims that US Stocks climbed further after the Fed minutes were released, which was misleading, at best. It appears that the article may have been re-written after the Fed release without giving thought to the headline. Often momentum algos will use headlines such as this to spark another wave higher. In this case, it didn’t work.

The market remains steady into the close, but the rally appears to be over. An alternate view is that SPX may pop to the 50-day at tomorrow’s open. However, the Dow did retrace to its 50-day Moving average, so that argument doesn’t appear to hold water.

Respectfully,

Tony

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