CIA Not Really In Libya

Charts: Exactly one week ago the market had a follow through day, which turned the rally attempt into a technical rally. Volume patterns indicate that this is one of the shakiest rallies yet in the two-year old bull market. There is one minor resistance level (1327) before serious resistance of 1333, which is the last Fibonacci level in the series. If volume remains weak it would be bullish for the market to hug resistance for a long time and consolidate. Blasting above resistance in big volume would also be good. Any other chart action would be bad.

Long War: Libyan rebels continue to get clobbered because bad weather means our beloved Warthogs and AC-130 gunships aren’t allowed to fly. NATO rules of engagement apparently dictate that allied warplanes can only fly at very high altitudes. They could theoretically fly below the bad weather and chew up Gaddafi’s army but they would then risk getting hit by missiles. The danger missiles poise to allied warplanes really isn’t that great but NATO wants allied pilots to operate in a zero threat environment because if even one pilot were captured or killed American and European public opinion would turn against the war effort.

The media is breathlessly reporting that Obama has authorized CIA operatives to help the Libyan rebels. This isn’t really true. It seems that the CIA is providing spotters for allied war planes. This job would normally be performed by US Army Special Forces. The switcheroo allows the Army to honestly say it has no boots on the ground. Also, reports that Canadian Special Forces are in Libya is probably another sign that the job of US Special Forces spotters is being farmed out. The bottom line is that America is not fully committed yet to the war effort. The US is still just a little bit pregnant as far as Libya is concerned.

In Syria, the government had been ready to roll over and begin democratic reform but fresh signs that America is acting weak in Libya have caused a new and violent crackdown. Not only is the market getting whipsawed by conflicting signals from Team Obama, the bad guys are also getting whipsawed. If Team Obama and the Libyan rebels lose this war it will get nasty on the battlefield and on Wall Street.

Libyan Weather Report: Bad weather is expected to contiune until this weekend. It is supposed to clear up starting Saturday. The Libyan weather report is now the single most important news item on the planet.