Al-Qaeda's Worst Nightmare

Charts: The S&P 500 closed at 1099, up .5%. Uptrend intact. Resistance is at 1100.

Fundamentals: The Blue Dogs are talking about creating a deficit commission, modeled on the lines of base closure commissions, which allow only up or down votes on spending cuts. If they can pull it off this would be great news. Industrial production data from China came in stronger than expected. This was the catalyst for the rally’s continued momentum.

Geopolitics: The Saudi Army is establishing a militarized buffer zone inside Yemen similar to the buffer zone Israel maintained in Lebanon from 1985-2000. Also, the Saudi Navy is blockading Yemen’s coast, preventing Iran or any other bad guys from funneling fighters into the combat zone. Iran is talking diplomatic smack against Saudi Arabia and the Kingdom is answering with warships and troop movements. The ball is in Iran’s court and most likely the Ayatollah will wimp out. The Saudi Army has never been used in battle, so the world is unprepared for its massive strength. The power struggle between Iran and Saudi Arabia is currently the biggest factor in the Long War. If Saudi Arabia prevails, slapping Iran and its proxies hard, ending the rebellion in northern Yemen, then Al-Qaeda will have sustained a tremendous body blow. And not just for obvious tactical reasons.
Al-Qaeda’s reason for existence is to reestablish the Great Caliphate of the Middle-Ages. Its greatest fear is that the Saudi royal family will do just that, forge an alliance of Islamic countries that essentially recreates the Great Caliphate. Al Qaeda was created because America saved the holy city of Mecca from Saddam Hussein’s clutches in the first Gulf War, not the House of Saud. The Saudi failure to stop Iraq in 1990 is Al-Qaeda’s number one talking point. America (99% infidels) is currently the guarantor of Mecca’s sanctity, Al-Qaeda’s number two talking point. Al-Qaeda’s worst nightmare is America voluntarily turning over the reins of power in the Mid-East to a newly militarized Saudi Arabia and pulling Yankee troops out of Muslim lands.