We Give You All CIA All the Time

Charts: Today the S&P 500 advanced, hit its 200-day moving average, found resistance, and retreated in higher volume. In the last few weeks it has touched the 200-day line dozens of times and found resistance. The 200-day line is a technical battlefield. A victory or defeat after a hard fought battle like this magnifies the importance of either the victory or the defeat.

Last week's gigantic rally has not yet seen a follow through day. The current rally is therefore not a technical rally but it is a de facto rally. Probably the follow through day will come when and if the 200-day line is conquered. If resistance holds at the 200-day line, then a sharp downdraft is possible since we would never have had our follow through day.

Fundamentals: There have been 15 Euro-zone summit meetings so far over the past 2 years, all promising to solve the Euro-debt crisis. Every summit has seen a global stock rally beforehand. And every summit has seen a correction afterwards. Maybe this time will be different and the rally will continue and morph into a bull market. There is no point speculating now about whether it will or won't because we don't know what the 16th plan will be until after the summit. All we know for sure is that the 15 plans that came before all sucked. Have you ever heard the old saying 16th time is a charm?

Long War: After a lot of spade work Egyptian Intelligence created the plan for the Iraqi Sunni Awakening movement in 2007. The Egyptian spooks and probably the CIA successfully sold this plan to General Petraeus, who then sold it to President Bush, together they implemented it, and because of this brilliant plan the Iraq War was won.

Today we learn that the radical Salafist parties (jihadist bad guys) in Egypt are physically attacking the Muslim Brotherhood in small street battles despite the good showing the bad guys have made at the polls. It is likely that Egyptian Intelligence is driving a wedge between the now moderate Brotherhood and the radicals. Egyptian Intelligence would only do this if it knew the CIA had its back. A broad picture emerges of the parts of the Long War controlled by Langley as going well.

But the parts controlled by the Pentagon are going poorly. Acting like Cambodia did in the Vietnam War, Pakistan has blocked NATO fuel and ammo supply routes. NATO is airlifting in fuel, which means it costs $400 a gallon to fuel a hum-vee. Before the supply routes were closed it cost $1 million a year to supply one NATO solider in Afghanistan. The current cost is now probably double or triple that.

Now think about the parts of Afghanistan controlled by CIA strongman Afghan General Razik around Kandahar, the birthplace of the Taliban. These regions are now more peaceful than Kabul. The Taliban are actually surrendering to the good guys in Razik's territory. Razik is known as the only man on Earth that the Taliban fears. He is so brutal that NATO will not give prisoners to him any longer because said prisoners come back mutilated from his interrogation methods. How much does it cost the US to pay for Razik's police and security forces per man? Only a few thousands dollars. The same could be said about the cost of African Union troops battling Al-Shabab. Native troops like this are very inexpensive and in reality more effective than US troops. This is called more bang for your buck. A million times more bang for your buck.

So the biggest problem we face is that the CIA is not big enough to be everywhere at once and faces huge budget cuts. Senators like to give money to the Pentagon because it creates jobs (building tanks, etc...). They don't like to give money to the CIA because no jobs are created as far as politicians can see. They can't see or don't care how many jobs are created by winning wars. As I said yesterday, keep your eye on Joe Biden, he has the CIA's back.