CIA = British East India Co.

Charts: At midday on the first of July the S&P 500 is at 1333, the last Fibonacci number in the series and a level freighted with cosmic significance. Earlier in the year the index blew past this key level twice in low volume and both times it came crashing back. At the time I said the index needs to hug 1333 and consolidate. That is also true now.

Fundamentals: American employment data is weak. Over the past two days American industrial data has come in stronger than expected. This could mean that the last two months of weak American industrial data was due to the Japanese earthquake and this negative effect is ebbing. Chinese industrial data continues to be weak. But if oil prices stabilize and Chinese real estate cools, which appears to be happening, then China can hit the monetary gas and juice its economy again.

Long War: The US Justice Department had been investigating 100 CIA interrogation cases where torture had been employed. Justice has narrowed its investigation to just two cases, where both detainees were killed during interrogation. Justice hinted that it really isn't going to go after these two cases very hard. The ACLU was enraged by this development. The CIA was very happy.

Combine this with the recent House vote where brain dead politicians failed to interfere in Company business and we are seeing (hopefully) the beginning of all non-CIA branches of government removing their long beaks from CIA affairs.

If it is totally left alone and allowed to act with 100% freedom, the CIA will evolve into something like the British East India Company (BEIC) of the 19th century. Britain didn't conquer the world with its army, BEIC did that under government license using inexpensive native troops. America has spent over a trillion dollars fighting in Afghanistan and Iraq. If a modern day BEIC were to have performed the same task, it would have made a profit and paid taxes to the government. Also, it would have won more easily.

BEIC invented the modern stock market. It was the first ever publicly traded company, the first where short and long positions were struck. The modern industrial world evolved from BEIC and the establishment of the British Empire. So if the CIA were to evolve into a modern version of BEIC, then history will be repeating itself or we could say retracing a previous path. And this helps explain why Fibonacci retracement levels are so important.