AFTER THE BELL-OIL TO $120, SPY, EURO/DOLLAR UPDATE JAN 11TH

ZeroHedge Jan 11th-Iran Interest Rates Raised To 20% To Fight Hyperinflation; Iran Nuclear Scientist Killed In Street Bomb Explosion.

Americans will not support an invasion of Iran without provocation by Iran. History is well documented that governments in order to achieve an objective will create circumstances, under the radar, to pressure an identified enemy to make the first attack.

As FDR did enticing Japan to attack Pearl Harbor, George Bush urging Saddam to attack Kuwait, Obama is now boxing Iran in to entice them to attack US interest. Nothing helps re-election like war; foreign and domestic: Oklahoma City-Bill Clinton, 911-George Bush, Iran-Obama.

Looking at Light Crude, the daily chart seems to have an Inverted Head-n-Shoulders pattern. IF this pattern breaks the neckline upward, then the calculated upside is between $110-$120. If this breaks the neck line based on Iran/US military encounter, sky is the limit. Either way, as of today, it seems the path of least resistance for OIL is HIGHER.

December thru many fund managers under the bus because the decoupling of the Euro from the S&P. Prior to December, fund managers could count on the currency to move lock step with the US index. The majority of fund managers missed the 1290 S&P upside that we called for due to this decoupling.

Looking at the Euro, the chart looks to be in a bear wave 3 on the daily chart. I project the ending of this 3 wave between $123-125. Generally a 3-wave, an impulse wave, will extend 61% of wave one.

Wave one was 12 points top to bottom. 1.61%x12 is 19. Subtract 19 from wave 2-top of 142, gives us a price target between $123-125. At this price, we will buy the Euro.

Here the dollar/spx in December began running together. Again, this shows the appetite for all things US. Money will always go where its treated best.

Conclusion: Inverted H-n-S pattern in oil, plus Obama desperate to win re-election, almost ensures escalation of Iran conflict towards war, and higher oil prices. (Nothing is ever a sure thing)

For now, money is flowing into all things American, its the lesser of two evils. The question is as everyone seems to be all in USA, will the EURO bottom as we project, money move out of US stocks/US dollar; moving into EURO, GOLD, OIL, SILVER, etc? Or will a rising tide float all boats, and everything goes higher on extreme bullishness? This we do not have an answer to yet.

So, we will go long the EURO at the calculated bottom, wait for the response by US equities. Our next TVIX insurance purchase is coming within days.

Tim Kathlina