Rage Against the Machine

Charts: The S&P 500 has plunged below the 1333 Fibonacci support level in huge volume. Not good. Next support is 1313. Charts over the past 2 years resemble the mid-1930s: rallies back then were explosive but in thin volume and corrections came in the form of waterfall patterns. Last year's biggest correction was 18%, not all that scary, but the velocity of the drop was the third worst in stock market history, which makes the drop look like a waterfall on a chart. It will be technically very bad if another waterfall correction ensues because the resemblance to the 30s charts will become more pronounced.

Long War: On Jan. 27 a CIA operative shot and killed 7 men while caught in traffic in the Pakistani city of Lahore. Probably some of the dead were ISI agents because the Pak intelligence agency stopped giving drone targeting information to the CIA and all drone strikes came to a halt. Over the past 24 hours drone strikes have resumed and 15 Taliban fighters have been vaporised by the flying robots. It is not clear if the CIA is acquiring its own targeting data or if the ISI has resumed its partnership with US intelligence. If drone strikes do not return to normal levels it will be very bad.
Libyan leader Gaddafi has lost control over sections of his country and oil shipments are being disrupted. Libya is the latest casualty in the Rage revolution. In 2004 Gaddafi halted his nuclear weapons program and started cooperating with the US in the Long War. While he is a bad person in a philosophical sense, for global financial markets and the Long War he is a good guy and the markets are melting down on his misfortune.
We have seen exiled Islamic radicals returning to Egypt and now the same thing is happening in Bahrain as bad guy political leader Hassan Meshaima returns to his native country in an attempt to co-opt the Rage revolution there. Probably in response to this bad news, the crown prince called off the military in suppressing the revolt and asked the Rage ringleaders what their demands were, hoping to bargain with them before the jihadists asserted control. The Rage leaders were unable to give the prince an answer. One is reminded of the 1950s movie Rebel Without a Cause where the lead character is asked what he is rebelling against and he answers: "What have you got?"