Sunday, May 30, 2010

Euro going on a bull run

Euro retraced 61.8% of the push up, so I call that a wave 2 down, now perhaps will be 3 up.   3 is normally larger than wave 1.

This would also be likely to push the US equities up.   It doesn't have to, but they have been highly correlated in the past.  The theory is that as the Euro goes up (USD goes down), people from Europe can more easily buy US equities, and in the US, they feel that it is better to hold "hard assets" i.e. stocks, instead of US currency.

I am not sure this really "makes sense" but the markets don't have to make sense

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Insightful and Useful Comment!