NATO Takes a Tiny Baby Step

Charts: The S&P 500 final Fibonacci number, 1333, is overwhelmingly important because this retracement level is a mathematical expression of the cyclical nature of history, tapping into the very fabric of human civilization. And yet most chartists don't give it much attention. Elliot Wave Theory is the most advanced form of Fibonacci chart analysis. Today most investment pros scoff at Elliot Wave Theory (foolish). These two forms of chart analysis tell us a major turning point is at hand. Another technical indicator says the same thing and we don't need advanced math to understand it: Since 2008 the yield on the US government 10-year note has formed a very clear, almost perfect, wedge pattern. A tight wedge pattern says we are in the calm before the storm.

Long War: Maybe you don't believe that America's weak policy in the Libya War is causing other Long War hot spots to deteriorate. Analyzing the situation in Sudan should change your mind. The evil dictator of North Sudan, Bashir, had been playing ball with the CIA for the last few years: a bad guy became a "good bad guy." Bashir allowed an election. North Sudan stopped funding jihadist militias. The country was ready to peacefully split in two. Nearly a century of civil war (2 million people killed) was ending. All this happened because a figurative American gun was being held against Bashir's head and the entire Long War was destined to cool off.

With Bashir's fellow evil African dictator, Gaddafi, being treated with kid gloves, the Sudanese Civil War is on the verge of restarting. Bashir is arming jihadist militias again and ordering them to attack the South Sudanese Army. Over the past few days 150 fighters and soldiers have been killed in Sudan.

Perhaps because of this, yesterday NATO launched laser guided bombs into one of Gaddafi's compounds. Apparently nobody important was injured. If this tiny baby step toward a more assertive policy in Libya were to continue, it would be a wake-up call for Bashir to back off. "If" is one of the the smallest word in the English language and the one with the largest meaning.

Specific Stocks: The Japanese word for beauty and tidiness are one and the same. Japan is a country of neat freaks. After the tsunami there is about 200 million tons of debris clogging parts of coastal Japan. This is the largest mess concentrated in one area in all of human history. This giant mess will be cleaned up with new equipment manufactured by Komatsu. Also, Caterpillar is buying Bucyrus and before that Bucyrus bought most of Terex. These are all mining equipment makers and Caterpillar is trying to create a monopoly. There are now only three big mining equipment makers left: Caterpillar, Joy Global, and Komatsu. The miners hate monopolies for obvious reasons and are likely to give orders to the second biggest equipment maker, Komatsu, over Caterpillar if everything else is equal for a given purchase.