Decades of War in N. Africa

Charts: The S&P 500 is exactly at the final Fibonacci retracement level, 1333. Hugging this resistance level in low volume is bullish chart action. At the beginning of the year and up to the recent correction leadership has been bad, with emerging markets and US small caps falling apart. Since the start of the current rally leadership has improved. Nevertheless, it is a geopolitically driven market, not technically driven.

Long War: The picture I painted in yesterday's blog concerning US involvement in the Libya War seems to be accurate. The Pentagon has been saying it won't engage in air strikes against Gaddafi's armor and artillery unless NATO makes a request and broadly hinting that there probably won't be any requests. Today rebel leaders say surgical allied air strikes are occurring inside Libyan cities, which speaks to sorties being conducted by US warthogs. The Pentagon is now shrugging its shoulders and saying NATO is indeed asking for these kind of air strikes. The song and dance about air strikes requests being channeled through the White house must be a smokescreen because if this were true the strikes would not be hitting the bad guys, which is not the case.

The rebels are grinding forward in the key oil city of Brega. Rather than summarize all the action let's just say they are acting like a professional army. And this is why the gains are slow and painful. The rebels are holding the ground that they gain, not rushing forward and back like a chicken with its head cut off. Some rushing about is happening because there are two rebels forces: The Free Libyan Army and ragtag rebels that are still haring off on their own.

The Algerian government says AQIM (Al Qaeda North Africa) is looting Gaddafi weapon bunkers and building up its capabilities throughout North Africa, taking advantage of the chaos caused by the Libya War. There are reports that the US State Department is talking to the Libyan rebels about AQIM. It is a certainty that when and if the good guys win in Libya, there will be a gigantic mess to clean up in North Africa. It will take years (maybe decades) of American involvement to clean up this titanic mess.