Charts: The upward sloping wedge pattern for the broad index has widened and is now an upward sloping trading channel. This is a big improvement because wedge patterns have not worked well in this market. Friday saw a big rally, which repaired some really bad chart patterns, at least for now. For instance, one more big down day would have caused a Death Cross to form in the NYSE composite. Death Crosses result in bear markets 50% of the time. The overall market finished the week flat. Volatility is sky high and has been for almost two years. Up till now extreme volatility has given us sideways action. The flat finish for the week mirrors the flat finish for all of 2011. It seems like we're going somewhere but we're really running in place.
Fundamentals: The reason for the big up day is China's GDP data came in as expected. Traders were afraid it would come in way worse because China is using a new methodology to calculate GDP. The old methodology was super kinky and corrupt. The new one is mildly kinky and corrupt. In China privately owned and state owned companies report economic data to government bureaucrats, who then massage the data to make themselves look better, i.e. they inflate GDP growth and dial back inflation. The new methodology eliminates one layer of crooked bureaucrats. The data still sucks, but not as bad as before.
Long War: Yesterday's Wall Street Journal ran an article titled "Unleash The CIA in Syria." It was written by a retired CIA case officer who still has lots of connections to Langley. He said that the CIA is only a little bit pregnant as far as Syria is concerned and it isn't really that involved in the war. He recommends that the CIA ramp it up. This is great propaganda. It is heartening to see that the CIA is lying to us in such an effective manner. In reality the CIA is full throttle in Syria.
CIA media manipulation is getting better and better. The air waves are full of the latest Syrian attack against a rebel held village. Except it isn't being called an attack by the media but a massacre, genocide, atrocity. All good stuff. Remember, Americans are a warlike people. They just need to be carefully whipped up into a frenzy.
Some aggressive Reuters reporters cornered a couple Syrian rebel military commanders and badgered them about the source of weaponry that the FSA is getting. It turns out that the FSA is getting a surprising amount of firepower from South Africa. Do you remember my last blog? Where I said in the future the CIA would get South Africa involved in the Long War? The future is now. Some weapons are coming from South Africa, but most are coming from former Soviet Bloc countries. Obvious CIA fingerprints. Also, old but high quality sniper rifles are coming from Belgium. More fingerprints, not only CIA but Navy SEAL, because who is training the rebels in sniper techniques except our good friends the frogmen?
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