A Typical Day In The Long War

Charts: The S&P 500 closed at 1126, down .14%. We saw a bearish downside reversal today but essentially the market is treading water until after New Year’s Day. Volume will go up in January and the charts will become very important; more important than they have been in months. January will almost certainly set the tone for 2010.

Fundamentals: The Consumer Confidence survey came in slightly better than expected and the Case-Schiller housing price index was in line, showing a fractional month over month gain. Fannie said that serious delinquencies have risen from 1.89% a year ago to about 5% (not good). Today’s treasury auction was better than yesterday’s. The yield on the 10-year went back down to 3.8%.

Geopolitics: The Pak Army killed 17 Taliban fighters and 1 leader on Tuesday. Pak security forces arrested 60 bad guys. Civilian terror strikes continue at a steady pace. This was a typical day.
In Afghanistan, the Taliban briefly captured a village in the north but were repelled by the Afghan Army; 10 bad guys killed and 1 good guy killed. A Taliban fighter who had infiltrated the Afghan Army killed an American soldier. President Karzai is complaining about NATO Special Forces strikes that kill women and children as well as bad guys. Unfortunately there is such a thing as bad children and bad women to go along with bad guys. Special Forces do not give bad guy body counts but we know they have been busy lately. Another typical day.
The Yemeni Army attacked Houthi rebel positions in the rugged northern mountains backed up by the Saudi Air Force. The rebels claim to have captured a Saudi Army outpost in these same mountains, which is probably true. The rebels have been able to capture Saudi outposts but not hold them for long. Neither side provided a body count for today’s combat. The Saudis are no longer breezily talking about building a buffer zone in Yemen, with their hands full trying to actually win an ongoing war. And in this theater we also had a typical day in the Long War.