Langley Has Its Crap Together

Long War: The Obama Administration is alarmed that the forces winning the war in Syria are linked to Al-Qaeda. Gasp! In response it wants to give more non-lethal aid to the moderate (non-Al-Qaeda) fighters within the rebel movement. Maybe the moderate fighters will get portable toasters ovens, which will bolster their spirits and make them fight better. I'm not sure what's really going on within the Administration but Qatari Intelligence and the CIA seem to have the situation well in hand and are happy with the job Al-Qaeda is doing for them. The spooks seem confident that the Frankenstein monster they have created can be controlled. And they are probably right.

Here's the thing with war: You have to win. It never works to worry too much about the messy aftermath of a war if these worries prevent you from winning. Win the &^%$ war and then try to clean up the mess afterwards, that's what works.

As the Syrian War has progressed the bad guys (Assad's Alawite religious sect) have hardened and become fanatical. They are damn good. They are tough to beat. the Al-Qaeda warriors in the conflict are even better. They are feeding Assad a non-stop diet of strategic suicde bombers in downtown Damascus. The only way to win this war is with superhuman Al-Qaeda warriors.

Is the CIA making the right choice? The only way to know is to take the global temperature of the CIA. Which is to say, how is Langley doing across the entire Long War. Is it screwed up? Is it hitting on all eight cylinders everywhere else besides Syria? If we can ascertain that it is doing a kick-ass job overall, then we can also say it is doing a good job in Syria. We have to make this calculation because there is no way for us to know what Syrian Al-Qaeda fighters are really like. How the hell can know that, sitting on our fat butts here at home while drinking fancy imported beer?

So overall how does it look? Yesterday the French Foreign Legion killed 30 AQIM fighters including one of the top three AQIM leaders. Public accounts tell us that the Legion is getting intellience from the CIA, that isn't a guess, that is a fact. So Langley has moles in AQIM and used them to take out a top leader and his bodyguards. So Langley has its crap together.

Qatar: Most Powerful Country on Earth? WTF?

Long War: Throughout the Mideast and North Africa the shape of the Long War is being molded by the tiny Gulf kingdom of Qatar. A few examples: Since the Arab Spring exploded across the region a few years ago the Muslim Brotherhood has become the dominate political force. Most important Brotherhood leaders now reside in Qatar and the organization seems to have been pretty much co-opted by Qatari Intelligence, giving it the ability to pull strings throughout the Arab world. The good guys in the Libyan War were financed and at least partially led by Qatar. The Syrian War has seen even greater influence from Qatar. Egypt is heavily dependent on Qatari financing and its leaders are beholden to the tiny kingdom. The Taliban peace talks are being held in Qatar. Al Jazerra, the news agency owned by Qatar, pretty much sets the tone for news coverage in the Muslim world. In instance after instance a common thread runs throughout most big LW battlefields, Qatar is running the show for the good guys.

One more example: In Tunisia we have seen a recent descent into chaos. But all of a sudden the hard line Islamic interior minister, Ali Larayedeh, is being elevated to a leadership position. Yes, Larayedh is a hardliner who will impose Shariah law on Tunisia but he is also a savage fighter against Al-Qaeda. This has Qatari fingerprints all over it. Qatar always makes this move: hard line Islamic leaders are put in charge of civilian, military, or militia-type organizations but these good bad guys are savage enemies of the real bad guys. This is the bargain, no democracy, no freedom of the press, but no Al-Qaeda and I think in the long run no socialism.

In the early years of the Cold War we saw the CIA almost completely in charge of the global conflict and the policy back then was to promote anti-communist, pro-free market dictators, without American troops dying on distant battlefields. This policy worked. Maybe you and I wish pie-in-the-sky, dreamy, idealistic democracy would have worked back then, maybe the CIA's hard-nosed but successful policy was a sad commentary on the state of mankind's moral development. Maybe. Maybe. Maybe. But it %$#& worked. The &^%$* Soviet Union was destroyed. Ten thousand Soviet nuclear warheads no longer threaten to destroy the planet.

So let's abandon our dreamy philosophical nonsense and ask the main question of the day: How closely linked are Qatari Intelligence and the CIA? Consider what just happened today. The Free Syrian Army attacked and liberated an old and non-functioning Syrian nuclear reactor, which at one time was being used to make nuclear weapons for Assad. Today the old nuclear reactor has no strategic value, it is just a pile of junk, but it has big propaganda value in the US because this reactor was destroyed by Israel many years ago in an air raid. It looks like the Free Syrian Army is finishing up a job started by the Israelis. This news story will really only resonate in the US. It looks like CIA fingerprints are behind Qatari fingerprints. I know this sounds nebulous, but analyzing intelligence agencies is a game of shadows and I am seeing shadows within shadows that look pretty $#@% good to me.

CIA Drinks Special Forces Milkshake

Charts: In the last blog I said that if the S&P 500 dropped to 1500, found support, and bounced up, then the technical damage done by the Doji Candlestick formations may be over. The broad index did exactly that, dropping 2% from its recent high and bouncing off 1500. What we need to see is healthy consolidation, not stalling action while the index flatlines, that's what Doji formations are: a form of stalling. We want to see the index move sideways in a rhythmic or trendline or wavelike fashion, not throw up scary candlesticks.

Fundamentals: Corporate profits as a % of GDP are at an all-time high. The value of the stock market as a % of GDP is near an all-time high. This is the main problem we are facing now. Corporate America has become super lean and efficient. It is churning out profits even though GDP is barley growing. This can't last forever. Corporations can only get so efficient. At some point GDP has to grow. the best way for this to happen is a free trade accord between America and the EU. Obama is working on that. He generally sucks at economic issues but he is right on this one.

Long War: 100 US Intelligence troops have landed in a border region near war-torn Mali to secure the area needed to build a US drone base. The Obama Administration calls them intelligence support troops. I think that means CIA paramilitary troops. I think that means the drone base will be CIA. I think Special Forces are not drinking the CIA's milkshake. This is really good news. (if I'm right)

Besides the repeated use of the word "intelligence" in the Executive branch dispatch I am making these above assumptions because there seems to be no more road blocks to the installation of Brennan as CIA Director. In the recent past, when Brennan seems to be moving forward, then the CIA has started kicking ass. When Brennan's nomination bogs down, then the CIA flounders, fearful of some lame director taking over which makes individual operatives want to cover their bungholes and act conservatively.

French and Malian troops have been bogged down in a savage firefight in the Malian town of Gao for several days. Yesterday they seem to have blasted the bad guys out of Gao and are hunting them down in the countryside. So the conventional phase of this war is still going forward in a positive manner.

Now the multi-year guerrilla phase is ready to start. The 7000 strong all-African Army that will fight the guerrilla war under French and CIA leadership is in place and nearly ready to go. It needs to establish road checkpoints across the jihadist threatened territory of the Northern Mali. These checkpoints need to be backed up with CIA drones. Then the lengthy guerrilla campaign will go smoothly.

If all this happens, and is deemed a success, then we will have a template for future LW wars (or campaigns). Native troops establish checkpoints, controlling the ground game, and CIA drones back them up with robotic air support.

World Is A Trail Of Tears

Charts: Today saw a sharp downturn. The broad index was down over 1%. Small caps were down 2%. Materials and industrials were down 3%. We've seen Doji Candlestick formations over the past few weeks and have been expecting chart weakness. If this weakness morphs into a correction we have to zero in on support levels and volume to guess what comes next. First support is 1500 for the S&P 500. If that holds convingly the downturn might be over.

One chart that doesn't get much attention is the graph for the US Stock market as a percent of GDP. In other words the stock market is worth X amount and GDP is Y amount and X is a percent of Y. Right now the stock market is about 130% of GDP, normally it is about 75%. The chart shows the % amount has been declining in a classic trend line pattern over the past 13 years, the length of the secular bear market. We will talk more about this in later blogs.

Fundamentals: Fed minutes today said that the party won't last forever and the Fed will have to quit printing funny money someday. The market acted like a spoiled little baby who had a lollipop taken away. Waaa! We want funny money, don't stop printing funny money. I don't like it when the market acts childish because children are unpredictable.

Long War: Senator McCain is acting as though he will give up trying to block Obama's picks for Sec. of Defense and CIA. Why did he change his mind? More important, why was he being so stupid in the first place? Okay forget the theory he was smoking crack. Probably he was acting so porky because the CIA is allowing Qatari Intelligence to use Al-Qaeda to win the Syria War. Fair enough, that is pretty scary. I think McCain changed his mind about blocking the nominees because somebody he respects sat down and had a chat with him, telling him in no uncertain terms to "Back the %$^# off and greenlight these nominees, you jackass. You don't have a %&$# clue how we should win this war with your fat ass welded to a Washington swivel chair." In any case he does appear to be caving and soon we will have a dovish Sec. of Defense and a hawkish CIA Director.

Sounds good to me. I will agree with liberals and say "Bring our boys home. Get the US Army out of the Long War." Of course the liberals don't want to hear what I have to say next, which is: "Turn loose the spooks from Langley."

And what a good job the spooks have been doing. Syrian rebels have taken away Assad's artillery bases. So Assad has to use Scud missiles to hit back instead of artillery. Scud missiles are inaccurate terror weapons designed to hit civilians, not weapons of war that can be used against other armies. The fact that he is using these terror weapons shows that he is at the end of his rope.

In Mali the French need help from the CIA. It can't come soon enough. The French government is planning on pulling the Foreign Legion out in a couple weeks but the bad guys are striking back hard. Yesterday the Legion was caught in a firefight that involved hundreds of soldiers. If France pulled out right now Al-Qaeda would regain control over the north very quickly and there would be no chance of a second Western intervention.

Mali needs CIA drones and it needs them yesterday. Unfortunately the looming budget cuts known as sequestration will slash the production of drones dramatically. Sequestration is designed to cut the most vital of programs because of a half-baked notion that if the cuts are really really stupid then they won't occur. Right now the Pentagon is saying, "Please give us flexibility, we will cut the amount specified but let us pick and choose." Probably the brain dead politicians will pull their heads out of their bungholes just long enough to say to the Pentagon, "Okay."Then their heads will go back into their bungs and they will do more stupid brain-dead nonsense. This is the world we live in. It is a trail of tears. 

Al-Qaeda Is Our Friend? How Can That Be?

Charts: The S&P 500 is throwing up a series of Doji Candlestick formations. Doji Candlesticks can best be viewed in a day to day chart sequence that covers a few weeks. In a chart like that a Doji looks like a little rectangle on any given day, a little box that pops up with the starting and finishing price for the day about the same, a kind of sawtooth pattern emerges. This is bearish, signaling a market peak, but it is only a short term or medium term pattern, unlike a big head and shoulder pattern which would be scary under these circumstance.

If we look at longer term patterns it looks better. The average secular (long term) bear market lasts 13 years. Today it looks as though a 13 year secular bear market is ending. The S&P 500 has to go up another 5% for it to convincingly beat its previous secular bull market peak, this would then be saying a new secular bull market is under way.

If 1500 is taken out in big volume and the Doji formation proves prescient, it could spell a new leg down. The jury would then be out on the 13 year bear market being over.

Cold War II: The US Navy isn't sure that the Chinese Navy really zapped the Japanese Navy with targeting radar ( a very hostile act, the prelude to weapons fire). We can ascertain this by reading between the lines in official US Navy pronouncements on the issue. China is actually acting pretty grown up all of a sudden, and Japan sort of looks like a whiny baby. Both countries are talking to the US Navy like they are kids talking to an adult. "He started it!" "No, he started it!" Cold War II looks to be mellowing out a little bit, for now.

Long War: Syrian rebels continue to take the wood to Assad's Army. The best group of fighters are Al-Qaeda militias. The Al-Qaeda fighters are ripping Assad apart. This is only happening because Qatari Intelligence seems to be pretty much running the show. Qatar is okay with using Al-Qaeda as a weapon. Probably the CIA wouldn't do this if it were 100% in the driver's seat. The Qataris probably think they can control the Al-Qaeda good bad guys once the bullets stop flying. The good guys have no choice but to go along with the Qatari game plan. This is beyond terrifying. This is like having your bowels turn into a block of ice. When analyzing terrifying geopolitical phenomena it is okay to scream out loud. Let it rip, belt out a wail of remorse, fear and panic, it helps, trusrt me.

North Korean Nuke

Cold War II: North Korea has successfully tested a miniaturized nuclear warhead. This took analysts by surprise. Previously North Korea has struggled with detonating primitive Hiroshima type A-bombs. This is a bit of big game-changer but not that momentous. North Korea will in the near future be able to target nuclear missiles on Japan and the Western United States. Beyond the capability this will give North Korea itself we can surmise that Iran will eventually get nuclear warheads that it can use with its already robust ballistic missiles, threatening Israel. The only way the US and Japan can counter this new threat is to expand their respective Aegis class anti-missile warship fleets. Despite the frenzy of military cuts we are experiencing right now the Aegis fleet will in time be expanded because public opinion will force the issue and Aegis technology will neutralize the bad guys' nascent nuclear arsenals.

Long War: The Syrian rebels have just captured the largest hydroelectric facility in the country. They just captured 24 fighter jets from Assad. They are mounting a powerful offensive against Assad on his home turf in Damascus. They are cutting off Assad's supply lines. The rebels are slowly advancing on all fronts. The credit for most of this goes to Qatari Intelligence, no doubt working hand in glove with the CIA. The endgame is probably still a year away but the rebels will win. Most conventional LW wars turn into guerrilla wars after the good guys win. This will probably happen with Syria because Iran will be working day and night to support an Assad guerrilla movement. Qatar will have to stay involved in Syria and battle Iran for the foreseeable future.

In Thailand, starting about three weeks ago, we saw an explosion of jihadist violence. The good guys were knocked back on their heels but have recently regrouped and are now taking the wood to the rebels, stopping at least one big terror strike in its track and wiping out all the bad guys in the process.

Hanging over all LW battlefields is the fate of the CIA leadership and the nomination of Brennan to Director. If Brennan is canned it will get hairy in jihadist land.

McCain Smokes Crack

Long War: All of a sudden its gotten real hairy in the LW. In Thailand and Malaysia we have seen low level Islamic insurgencies blaze up to the size of the big bad guerrilla conflicts of the Mideast, especially in Thailand where innocent civilians are starting to get mowed down, buildings blown up, cops killed in gun battles, bad stuff.

In Mali we find out that French fighter-bombers are only hitting paper targets in the deep desert where the bad guys are holed up. And a new guerrilla war has taken root in Mali with suicide bombers hitting soft targets. Many of the bombing victories from the early stages of the Mali War were also cardboard and paper targets, fake training camps, and other artful devices. AQIM is not hurt as bad as we thought, although it did get kicked out into the desert, it did lose to the French in stage one of the conflict, there is no denying that. However it was more of a strategic retreat than a total rout.

One of the reasons for much of this bad news is that the CIA has returned to wandering the wilderness, rudderless without a permanent, kick-ass, Director. When it wanders the wilderness, the CIA loses its mojo, bad things happen on planet Earth.

A cabal of Senators has put a "hold" on Brennan's nomination as CIA Director. A hold is like a filibuster and theoretically has no time limit. Obama is getting boxed in a corner. Before they will green-light Brennan the Senators are asking the White House to release crucial classified information about the CIA attack drone program, this information can be used to challenge the drone program in US civilians courts. If civilian courts start ruling on the legality of the drone program, it will immediately cease to exist. The drone program may be the most awesome forc on Earth, but we just found its version of kryptonite (the US Court system). So Brennan is at risk of having his nomination jerked away if Obama really is forced to release classified info to these Senators, because he will probably not release anything.

The President then will have to put up a weaker candidate for CIA Director because the doves are ruling the roost over the hawks.  This is only possible beause Senator McCain has become a big dove and is throwing his weight onto the wrong side of this arguement within the Senate.

One explanation for McCain's behavior is that he has started smoking crack. This explanation polls highest among the analysts at Dave's Market Update. The chief analyst recently said, "Hell yes, McCain is smoking crack, look at the burn marks on his hands, crack-pipe burns." 

A Long Road Ahead

Long War: There are three major wars or campaigns raging within the Long War at present: 1) Afghanistan. 2) Syria. 3) Mali. The CIA attack drone program is only operational in Yemen and the Pakistan tribal region. Amazingly, CIA attack drones aren't flying and fighting within any of the central battlefields of any of the 3 major wars, although I admit the Pak tribal belt is strategically vital to the Afghan War; nevertheless, CIA attack drones do not (as far as we know) operate anywhere within Afghanistan. CIA surveillance drones are free to fly anywhere. But attack drones are muzzled to a degree by the White House and Senate. 

A drone base is being built in Algeria to be used against the bad guys in Mali, which is the most important of the three wars. US Special Forces will operate Mali attack drones, not the CIA. At least this is the structure that is evolving at present. And a screwed up structure it is. How many times has this blog advised our civilian leaders in Washington to leave the CIA the %$^# alone?  Why aren't they listening? Of course we know the answer, the civilian leadership is bunch of pinheads.

We are feeling the loss of General Petraeus as CIA Director. Hell, he was grabbing assets away from the US Army while he was Director, things were going gret back then. Now the Army is drinking the CIA's milkshake. It is not good to have the CIA's milkshake sucked away by Special Forces. We want is the CIA taking over Special Forces (not the other way around) and simply rebadge the SEALs, Green Beret, etc... within the CIA Paramiltary Force, the CIA's ground forces. We want the CIA's ground forces to get hundreds of times bigger.

But the new Director hasn't taken over yet. The senate is hammering away at Brennan, in the hearings. The Senate Intelligence Committee is trying to grow the stones needed to turn down Brennan. Assuming that doesn't happen, then Brennan will be confirmed and he is going to work night and day to overcome the damage caused by the CIA's long meandering trip through the wilderness, when the Deputy Director was in charge.

In 2014 the CIA drone program becomes operational throughout Afghanistan and the US Army, USMC leave. That is baked into the cake. This is a good thing. It gives the CIA an automatic shot of testosterone. Before that happens, the CIA needs to take over the Mali drone base. If that happens the CIA will be on steroids This will be goal one for the new Director. To make it happen he needs to gut punch the US Special Forces. Is that easy? Is it easy to gut punch a Green Beret? You try it. I won't. 

  

Drones Are All We've Got

Long War: The nominee for CIA Director, John Brennan, was in on the begining of George Bush's CIA drone program. As a Nartional Security Advisor, Brennan was the leading force in convincing Obama to continue the drone program and later expand it 15-fold (Wow!). Brennan was the architect of the CIA's drone program in Yemen, a jihadist playground that at one point held more Al-Qaeda operatives than Afghanistan and Pakistan combined. The Yemeni program can only be described as brilliant and it throttled back the gravest danger zone in the Long War up till Mali. Brennan is Mr. Drone. Here's the rub, with US troops pulling out of Afghanistan and massive military cuts on the horizon, all the good guys have in their arsenal is drones. Without drones we lose the Long War, plain and simple.

The Senators didn't like Brennan telling them to shove their questions about CIA enhanced interrogation where the sun doesn't shine. In their witless anger the brain-dead and mindless politicians decided to strike back. They are demanding documents from the Obama Administration detailing and justifying how CIA drones are used to kill Al-Qaeda (and other bad guys) who are US citizens. The Senators are making a power play, they want more oversight and control over the CIA and think this malarkey about US citizens playes well in Peoria, yeah, like CIA drones are gunning down Boy Scouts in midtown America. This is bad.

Many of the world's top jihadists are US citizens, in fact the most effective bad guy leaders are US citizens. More to the point it would be easy for Al-Qaeda to recruit US citizens and fill their ranks with drone proof bad guys if laws were passed preventing drone usage against US citizens.

Obama needs to step it up. He needs to protect the CIA. He needs to keep citizen oversight to a minimum. He needs to make sure our only effective attack dog is not wearing a muzzle.

A New Sheriff In Town

Charts: First support for the S&P 500 is a band between 1498-1502, the band centers on the round number 1500. Next support is 1474, the 2012 peak. The index has screeched up 6% year to date. It needs to consolidate and bounce up off these support levels if we are to avoid the harsh corrections we've seen in this bull market thus far.

Long War: The presumptive CIA Director, John Brennan, recently completed his first round of Senate hearings. Anything involving the CIA is a closed hearing. The Senators left the hearing spitting mad. Normally they wouldn't say much to the media after this closed door hearing but the politicians were so angry they flapped their gums like gossipy schoolgirls. They said Brennan was not forthcoming on his views on enhanced interrogation (torture) or his views on rendition (farming torture out to allied intelligence agencies). They had specifically told the nominee to have his positions ready to go. But NOOOO, he stonewalled them, telling them to shove their questions about torture where the sun doesn't shine. My oh my, one simply doesn't talk to senators in that manner, especially when they have the power to can your nomination. Does anybody know how to spell brass balls?

But the senators won't can his nomination, they don't have the stones to do that. And they will be starting off in a very weak position once Brennan takes over. Civilian oversight may be almost nonexistent with the new Director. I can't imagine a better start to the Brennan era.

The French Foreign Legion had been knocking the crap out of Al-Qaeda in Mali. Over the last couple days the bad guys have regrouped and started fighting back, halting the string of lightning victories enjoyed by the good guys. AQIM is tough. AQIM doesn't just roll over and play dead. The French have responded by mobilizing Tuareg rebels, throwing them into the fight, even though this is controversial and anti-democratic; also it puts France in the position of dictating the eventual political map of Mali, tsk tsk. Good move, anything to win. This move has CIA fingerprints all over it. Isn't it nice to have a new sheriff in town?

Cold War II: Over the past year Japanese fighter jets have scrambled against Chinese fighter jets about 100 times. Nothing like this has happened since WW II. A week ago Chinese warships started painting Japanese warships with targeting radar, a prelude to launching missile volleys. This has never happened before. Defense experts say that war between Japan and China is impossible for two reasons: such a war is "unthinkable" and the trade flows between the two Asian giants are large. This is what I have to say about "unthinkable"... I just thought about such a war so its not unthinkable. As far as trade flows... there is no historic relationship between high economic activity between two great powers and peaceful outcome to disputes; in other words throughout history big powers that trade with each other go to war all the time.

America is about to slash its military spending. Conventional firepower is going take a big hit. Do you think this has anything to do with the Great Dragon roaring so loudly. Is this a good day to give up sniffing glue? No, it is a bad day to give up sniffing glue, which is my cute way of saying we need to keep all our firepower up to snuff, but that's not going to happen.

CIA Is Back

Long War: After David Petraeus was eliminated last year as CIA Director the agency went through a long walk through the wilderness, not sure if a hawk or a dove would be appointed as the next director. Not surprisingly, the bad guys made huge progress in the global struggle during this period of inactivity on the part of Langley. Specifically, AQIM (Al-Qaeda North Africa) decided to take over the other half of Mali that it didn't already own. Fortunately Obama did appoint a hawk to take over the CIA, a firebreather in fact. John Brennan is the architect of the CIA's drone program, the best of the best.

And with the appointment of Brennan, even though the Senate has not yet confirmed him, like a coiled spring Langley sprang into action. A coup was staged against the jihadist state of Eritrea. The coup did not succeed in overthrowing the government of Eritrea but now that evil little country has a permanent opposition agitating for change night and day, forcing the jihadist government to turn inward; this is a bigger deal than it sounds because it sends a message to bad guys everywhere: the CIA is back.

France sent the Foreign Legion into action against Al-Qaeda in Mali, knocking the bad guys out of all population centers. At first the Obama Administration said it wasn't helping France at all. But the French told the media that they were receiving all sorts of help from "American Intelligence." Then Obama said a CIA drone base was being built in Algeria to go after AQIM on a long term basis. Right before that announcement Algeria attacked Al-Qaeda hostage-takers along the border of Algeria and Mali. Algeria didn't even try to rescue the hostages, no it just wiped out everybody, good, bad and indifferent. This attack had big CIA fingerprints on it. The attack was a monster body blow to Al-Qaeda. President Obama's change of heart probably came from Hillary Clinton holding his fingers to the fire, dragging him kicking and screaming back to fighting the Long War.

France continues to attack Al-Qaeda in North Africa, acting with unusual aggression. They wouldn't be that tough on their own. They are certainly being led by the CIA. For one thing France is obviously using US satellite imagery for its current bombing campaign, which means NSA and CIA are knee deep in the war.

While all this was going on the CIA began intercepting Iranian missile shipment across the Mideast, acting through the US Navy and local Arab allies.

This is all very promising. Still, there is a lot of Long War to fight. The USMC and US Army are going to leave Afghanistan much more quickly than anyone imagines. The CIA has the right leadership to take over. As always, it just needs civilian leadership to get out of the way. 

Fiscal Cliff No Joke

Charts: The market is in a rally attempt. It is not in a rally. It needs to consolidate its gains for about 4 days and then have a follow through day (up in bigger volume than the early stages of the attempt) to have an actual technical rally, which will end the correction. The S&P 500 has inched up above its 200-day moving average. It needs to hold above this level for a technical rally to take hold.

Fundamentals: Some in our core group are poo-pooing the damage that may occur if the US economy drives off the fiscal cliff, which is to say that Congress does nothing and allows scheduled spending cuts and tax increases to occur. Here is the best way to think about the fiscal cliff: forget the spending cuts, they are mostly smoke and mirrors, the only cuts that are real will hit the Pentagon. Instead let's simplify the whole issue by focusing on the tax increases. If we drive off the cliff, then $400 billion in new taxes will hit in 2013. Maybe nothing bad will happen. Also, maybe pigs can fly. No laws of aerodynamics are violated with the notion of pigs flying: it is within the realm of possibility. The same is true of this gargantuan tax increase. Maybe. Maybe. Maybe. Okay, let's get past anything is possible. In 1938 a similar tax increases hit the US economy as it was recovering from the Great Depression. This sent the US economy back into a tail spin. In Europe similar tax increases under the auspices of Austerity have plunged that continent back into recession. Every historical example that we can name tells us that a big tax increases right now will smash the US economy back into a savage recession.

Long War: The fiscal cliff generates real cuts to the Pentagon, $50 billion in 2013. The Pentagon has no discretion over where to cut. Instead the cuts are designed to slash the most vital programs and weapon systems, not (for example) health care for retired veterans (which wouldn't hurt military capability). The cuts are designed to cripple national defense. The cuts are like a man kicking himself as hard as he can in the balls. They were designed this way to make the Republicans bow to the will of the Democrats. This shows how stupid and weak the Republicans are but more to the point if these cuts go through America will suffer huge losses in the Long War and China will roar like the Great Dragon it is. Just like firing CIA Director Petraeus, these potential cuts show how the awesomely powerful USA can only be hurt by one great power on Earth: the awesomely powerful USA, our own worst enemy. 

Fiscal Cliff

Charts: The market has been in a correction since late Sept. It is now in a rally attempt. The correction reached about a 10% loss on most of the major indexes. That doesn't sound too bad, except these indexes all plunged below their 200 day moving averages; so the correction has been worse than you might think from a chartist view point.

Fundamentals: Right before the election the market thought Obama and the Republicans would extend most of the Bush tax cuts and then try to leisurely hammer out a deal without the January fiscal cliff deadline breathing down their backs. The market knew that there was no way a deal could be reached by January. An extension would give both sides room to maneuver. The market wanted that extension. But Obama got super cocky and tried to hammer out a deal favorable to his ultra-left wing agenda without an extension. Obama thought he could put a gun to the Republicans' head and get everything he ever dreamed of right now, all at once. But the market is more powerful than Obama and it seems that the market will get its way, we hope, which is to say an extension on the tax cuts. If not, then the correction will turn into a bear market and the economy will drive off the fiscal cliff.

Spain is saying it will create a host of free trade deals with Latin American countries. The recovery is dependent on all major economies opening up and creating free trade accords. Austerity, fiscal discipline, government spending policies, none of these make any difference in the medium and long run. All that maters is free trade. That is the only thing that will keep the recovery going at this point.

Long War: CIA Director Petraeus was canned for having an affair, the greatest military mind of our generation. In WW II George Patton was canned for slapping a sick soldier. Patton was the greatest military mind of that generation. America is the only great power in history to eliminate its best military leaders during crucial wars for nonsensical reasons.

But its not as simple as all that. In my last blog I said that the killing of US personnel on Sept. 11 in Libya proved that the CIA was way more involved in the Libyan Civl War than was commonly assumed, way more involved than Congress or the White House had authorized. And Langley is more involved in the Syrian Civil War than they are supposed to be. Because of the hot juicy sex scandal nobody is digging into Langley going rogue. So Petraeus quitting or getting fired has a very good side effect. It is almost too big of a conicidence to swallow. Why did he really quit? Analyzing the CIA is like reading tea leaves, dificult to the point of impossible. Langley is home to the greatest liars and con men on Earth. We need them to keep lying and those lies need to be believed. More important, the CIA must never have civilian oversight. If the current Deputy Director is made Director, then we are out of the woods.        

Long War: There was a lot of media hand wringing when AQIM (Al-Qaeda North Africa) attacked the US Consulate in Libya and killed what we thought at the time were State Department employees. We now know most of the Americans killed were CIA, in fact most were ex-Navy SEALs. The State Department mission in Libya was and is a front for the CIA. From all this we can deduce that Dave is correct in his conjecture that the CIA was essetially running the Libyan War and remains much more active there than the media would have us believe.

And this is true in the Syria Civil War as well. The CIA and the rebels are winning in Syria. It is a scary thought, but Al-Qaeda is winning in Syria also. The CIA is not only using Al-Qaeda in Syria but in Iraq as well. Iraq is aligned with Iran and Syria. The CIA told us openly it has pulled all operatives out of Iraq. After it did that Al-Qaeda in Iraq launched a huge terror campaign. But the terrorism was and is aimed against a non-ally (sort of an enemy, okay a frenemy) of America. Iraq deserves to get chewed up by Al-Qaeda and after getting mauled for a while they seemingly stopped Iranian overflights of their country. The overflights were carrying weapons.

I read a lot into the CIA having a much bigger presence in Libya than they admit. It is also significant that there is no media follow up to this revelation. Nobody cares what the CIA does. This is good news. Under the cover of darkness Langley will win the Long War. If everybody continues to look the other way, there is nothing they can't do.

Long War Wild Card? Not Really

Long War: The anti-Islamic U-tube video, Innocence of The Muslims, has ignited massive violence and unrest across the Muslim world. It seems to be a wild card, a freak occurrence beyond the control or planning of the good guys. This is not really the case since at any one time there are hundreds of anti-Islamic videos, poems, cartoons, and so forth floating around the web. The bad guys are simply riding trend lines that are well established and predictable.

What we need to do is understand how this latest Long War flare-up fits into the big picture. The first thing to jump out is the assassination by AQIM (Al-Qaeda North Africa) of a US ambassador and other personnel in Libya. AQIM had cells in place inside Libya to take advantage of any opportunity like this video at a moments notice. AQIM controls about 2/3 of Mali, an area bigger than France. AQIM has its own country and is more than a regional power, but a global one. We already knew all that but we have further proof now.

Team Obama is now debating whether or not the CIA should extend its drone program down this side of Africa into Libya and beyond, whether it should take on AQIM or not. In time the US will of course go hammer and tongs after AQIM, but not for a while because we have Obama cowardliness surfacing before the election. I remind you of my prediction that the CIA drone program will someday engulf most of Africa.

The offending video was financed by Egyptian Coptic Christians. This shows that the LW is taking on a more religious tone as the bad guys move down the coasts of Africa toward South Africa, which is a militantly Christian nation with massive military potential and firepower. The more religious the LW gets the hotter and more violent it will get and the risk of big conventional wars increases. It's going to get worse before it gets better.

This means certain  energy stocks might do well and in time certain defense stocks will too once America gets past the fiscal cliff.

CIA Will Do The Voo-doo That They do So Well

Long War: In Syria, several days ago the FSA planted a bomb somewhere in or around Assad's military headquarters. The bomb went off but we only got Assad's version of how effective it was. Of course the bad guys said no Syrian Army leaders were hurt. In fact they said the bomb was planted in a building under construction and did no more damage than twist a few pieces of rebar, implying that the rebels are stupid beyond belief (they aren't). The FSA did not comment on how effective or ineffective the bomb attack was. This was the second of two sophisticated remote detonated bomb attacks targeting Syrian Army top brass. The first attack was a huge success. Probably the second one was also a big success. The first successful bomb attack was followed by bragging. The second was not.

When CIA Director Petraeus was an Army general he would always downplay victories when talking to the media. Victories were called minor setbacks or they were described as achieving "fragile gains, easily reversible." This is his hallmark. In the past Petraeus has usually told us the good guys are barely holding their own or even losing. This is because he doesn't care about stroking his own ego. Instead he uses the media as a weapon to help win wars. The American and European public will be more willing to allow NATO to create a no-fly-zone in Syria if they think the rebels are losing. This is why we didn't hear about top Syrian brass being killed in the latest CIA sophisticated bomb assassination strike.

Meanwhile, the war rages on. Right now, on the ground, in the battlefield city of Aleppo, the war has never been hotter: 150-200 soldiers are being killed everyday in Aleppo. It has been a long time since the Long War has produced a battle of this size. It is evolving quickly. The rebels are shooting down more Syrian aircraft with surface to air manpad missiles. The rebels are mounting heavy caliber machine guns near Syrian airbases and shooting down fighter jets as they take off. Assad's Syrian Army is cutting off water supplies to Aleppo with air strikes.

The Syrian Army has resisted using infantrymen to push into Aleppo until very recently. One of the reasons is that Assad's officers are Alawites (Shiites) and the Syrian Army infantrymen have always been Sunnis. These Sunni infantrymen often leave the ranks of Assad's army to join the Sunni rebels when pushed into combat. But Assad has rebuilt his army with Alawite infantrymen in the past couple months and he can now mount some kind of infantry invasion. He is trying at least and his army is gaining ground in Aleppo over the past couple days with foot sloggers moving into this red hot fire zone.

But the rebels have the capability to push back in Damascus and elsewhere and that is just what they are doing.

The war seems to be spinning out of control with Kurdish rebels launching attacks on Turkey from Syrian bases and sectarian conflict spreading into Lebanon. But hold on a minute and let's go back to that remote controlled sophisticated bomb strike with big CIA fingerprints on it. The rebels didn't brag about the bomb strike. They were good boys and kept their pie-holes shut. What does that mean? The CIA is exerting control over them. CIA control is good. It leads to good things. We don't know what those good things might be but we have faith that those clever bastards in Langley will do the voo-do that they do so well.

Good Guys Winning in Syria

Long War: In Syria, the Battle for Aleppo rages on. Assad's Army must take the gateway district of Salaheddine to win this battle. At one point Assad held 50% of Aleppo and all of Salaheddine. Now he holds 40% of the city and the rebels have pushed back into Salaheddine. The rebels have retrenched around the capital city Damascus. The rebels have attacked several of Assad's air bases and captured one. The rebels have destroyed a number of jets on the ground and shot 3 aircraft out of the sky with surface to air missiles.

Assad cannot mount serious ground assaults against rebel formations. Therefore his best tactic is pound them from the air. But if the rebels can take air bases away from him, then he is in for a world of hurt.

Iran is feeling the heat as its puppet faces defeat in Syria. Iran is making all kinds of threats, and in diplomatic double-talk it is saying its nuclear program is way more advanced than anybody thinks and is hinting it will start throwing nukes around one of these days.

The US State department slapped Iran down hard diplomatically when the pariah nation hosted the non-aligned countries conference and then the keynote speakers all made speeches slamming Iran. Ouch. This required careful planning and behind the scenes execution by Hillary Clinton, who continues to kick nine yards of ass despite Obama's cowardliness.

In the rest of the Long War the same old pattern holds where the parts controlled by the CIA are doing well and those controlled by the Pentagon are doing poorly. CIA drone strikes in Yemen destroyed an Al-Qaeda terror team as it was on its way to make a big strike. Obviously then the CIA has moles inside AQAP (Al-Qaeda Yemen).

But in Afghanistan the Taliban has infiltrated the Afghani Army in a big way and insider attacks are at an all time high. Insider attacks keep coming and coming. Five Australian soldiers were killed yesterday and Australia will surely pull out ahead of schedule.

Deep in the south of Afghanistan we are getting hints of activity by Kandahar police chief Razik. He is the CIA installed strongman down there who has taken over some of the drug trade. Razik is beginning to flex his muscle in a small way. If the Taliban's insider attacks do indeed chase NATO out of the country ahead of schedule, then Western public opinion will become totally indifferent to what goes on in Afghanistan. If the cloak of indifference is big enough, then the CIA will be able to use strongmen like Razik to take over the country.

Now consider this, and see if you think we have an example of CIA fingerprints... The beheading campaign that the Taliban launched after the CIA killed several top bad guy leaders seems to have slipped away from the Taliban upper circle. Rogue and very young Taliban fighters are now beheading children, sparking outrage among Afghani civilians and tarnishing the Taliban's image.

If the CIA were to be left completely alone, if NATO, the Western NGOs, and all the foreign do-gooders were to leave, then the spooks would be able to dust off their dirty tricks book and take complete control. Right after the book is dusted off it will get ugly. But then it will start looking better.

Obama is Cowardly But Intelligent

Long War: There are only two countries that have genuine overseas military empires: America and Iran. America has about 10,000 overseas military bases and if we count Iran's proxies (such as Hezbollah) then it has about 200. It is fair to say that America's empire is fifty times stronger and larger than Iran's. And yet America can still lose to its much weaker opponent because America is subject to cowardliness in its top leadership.

Iran is now admitting that it is sending special forces soldiers to fight for its imperial puppet, Assad, in the Syrian Civil War. America also has special forces soldiers fighting in this war, although it does not admit to this fact. The two empires are at war with each other.

America cannot let Iran get away with such direct support of Assad or the global capitalist structure will suffer. The answer is a no-fly-zone. Recently Turkey has said forcefully that a buffer zone must be created within Syria for refugees escaping Assad. Hillary Clinton and her State Department are backing Turkey's efforts to create a buffer zone. This is step one toward creating a no-fly-zone. If the buffer zone materializes, then the no-fly-zone will be right behind (a good thing).

Hillary is dragging Obama forward on the no-fly-zone even though the President is kicking, screaming, and pulling out his hair like a spoiled brat. Probably Petraeus is pressuring the President as well.

The CIA can hammer Obama by pointing to its recent monster victories in Afpak with the killing of the top Haqqani leader and top Pak Taliban leader. This will help pressure Obama. It looks like the two top bad guys did indeed choke on hellfire missiles as reported in my last blog because the Taliban is going berserk. Both the Pak Taliban and the Afghan Taliban are on a psychotic beheading campaign, lopping off the heads of anybody and everybody that they can get their hands on. This crazed behavior tells us that the bad guys are deeply frightened. At least some of the bad guy's protectors within the ISI (Pak intelligence) have turned and now support the CIA. Petraeus must have really turned the screws on them.

So the global war rages on. It is being fought in the distant battlefields of the Islamic world and inside the mind of the cowardly but highly intelligent President of the United States. We need to win in both arenas.

Hell On Earth, Courtesy of Raytheon

Long War: Several weeks ago CIA Director Petraeus held a meeting in Langley with the heads of ISI (Pak Intelligence). Shortly after that meeting a massive drone blitz began in the Pak tribal lands. It was the biggest drone blitz ever, with multiple drone strikes occurring on the same day, day after day. Not only was it large in scope, it was also different than previous drone strikes in that it was targeted. The strikes followed a pattern, like a dragnet narrowing down on a single target. Today we learned what that target was. We are told that drone fired hellfire missiles killed the Haqqai Network's operational commander, Badruddin. The Haqqani Network is the most powerful of all the Taliban's and its operational commander the most wanted man on the planet. If this is verfied, then the CIA has scored a huge victory.

While all this was going on there has also been a targeted NATO air strike blitz following a similar pattern in Afghanistan resulting at the same time in the death of Pak Taliban logistics commander Dadullah, also one of the most dangerous men on the planet. The Pak Taliban (along with Al-Qaeda, the Haqqani Network, and the Afghan Taliban) is one of the big four jihadist organizations, the baddest of the bad. Killing Dadullah is another big victory.

What did the CIA Director say to the ISI leaders? Can we guess? How about... "I will kill all your children and grandchildren if you don't give up Badruddin and Dadullah." Do you think he might have said something along those lines and then go on to prove that he means business? Probably.

Now consider another item... So called Green on Blue killing in Afghanistan are at an all time high. The Pentagon is now calling Green on Blue killings "Insider Killing" either way this is when a Taliban infiltrator within the Afghan Army kills a single NATO soldier or several soldiers. This is how most NATO soldiers meet their death, not in actual combat. Infiltrating an organization like an army is an intelligence agency activity. Preventing such an infiltration is an intelligence agency activity.

The entire Long War is an intelligence agency activity. That's why we should get the US Army and USMC out of all LW hot spots and turn the global war over to Special Forces and CIA. That's why the CIA should have complete operational command over all Special Forces. That's why, for the first time, we have the right person in the position of CIA Director.

And this transition is occuring. More jihadist are dying from the thermal shock wave of drone fired hellfire missiles than any other cause in Afpak. Whether you adhere to one of the three Abrahamic faiths or not, the Jihadist do, and the hellfire missile therefore has religious significance for them at least. The hellfire's thermal shock wave is calibrated to exactly replicate the ambient temperature of hell itself, which is 6500 degrees. So the engineers at Raytheon have designed this missile to give the jihadists a taste here on Earth of the place that they are destined to spend eternity. That's why they call it "hellfire."

The Truth Shall Set You Free. Not!

Charts: Round number support is key right now for the major indexes. The S&P 500 is finding significant support at 1400. The Nasdaq is finding support at 3000. However the small cap Russell 2000 just lost support at 800. Overall action is flat with a slight upward bias. Volume was very low today, which is good for a flat market.

Fundamentals: The strong rally that started with the ECB promising another round of QE (printing money out of thin air to buy bonds) is fading because the ECB hasn't started QE yet. The market loves QE even though it doesn't work. The Bank of England is getting ready for QE4, yet the British economy sucks. Japan is on something like QE20, its economy really sucks. QE does two things, it jacks up the price of commodities and it jacks up stocks. Higher stock prices creates a wealth effect which is good. Higher commodities obviously hurts economic growth. The two cancel out, so QE ends up doing nothing. It is being used as a substitute for free market reform. There is no substitute.

Long War: The civilian government of Egypt is busy sacking army officials. Normally you'd think that is bad, but the Egyptian Army has gone to war against Al-Qaeda in the Sinai Peninsula, which should have been done a long time ago. Something therefore is going right in Egypt. As the good guys dig into the Sinai they are discovering that Al-Qaeda is much stronger than they thought, so strong that the bad guys could probably start a war with Israel and drag Egypt into it. This is why Egypt is attacking.

In Syria, the rebels are grimly holding on in Aleppo but they are opening a new front in the oil producing region of the country. Assad cannot afford to lose any oil fields, so if this new offensive makes headway, then bad guy troops will have to be funneled out of Aleppo. Good chess playing on somebody's part.

More and more experienced fighters from Libya are turning up in the ranks of the FSA, training, leading, inspiring. Here we have another example of CIA fingerprints, and they are well disguised prints, hard for anybody to fathom.

It pays to ponder the very nature of the CIA. Imagine you are walking through the marble clad headquarters in Langley. Overhead you will see an inscription, the CIA motto, which is from the Bible: The Truth Shall Set You Free. Not far from this inscription are a few rows of stars, representing all the CIA operatives that have died in the line of duty. There are only about 50 or so stars. A number that is laughably low, absurdly low, an obvious lie. A lie right next to the motto about truth. Here we have an existential message concerning the world's premier intelligence agency: We are lying to you, but its for your own good. So shut your pie-hole, look the other way, leave us alone, and let us do our thing.

Moral Superiority Part II

Syrian Civil War: The FSA rebels (good guys) have downed a Syrian fighter jet with a manpad missile. So the CIA is almost certainly giving the rebels surface to air missiles. If this is true, then the media will eventually sleuth out that the missiles are being paid for by Qatar, Turkey, or Saudi Arabia. This doesn't mean that the missiles aren't being green lighted by Langley, just that tracks are being laid to disguise the ultimate source.

The rebels say that Al-Qaeda is indeed fighting on their side but Jihadist brigades are isolated from other brigades and are in effect quarantined from the bulk of the FSA to avoid infection, in an almost medical fashion. The idea is that once Assad is overthrown there will be a second war against Al-Qaeda and this quarantine structure will make it possible to win that war. The FSA needs Al-Qaeda fighters because they are the best of the best and bring crucial skills to the battlefield. Of course this is dancing with the devil and of course it is a dangerous game to play. The Long War is a dangerous game to play and without good bad guys we would be in worse shape than we already are.

Hillary Clinton and Turkey's top leaders are talking about opening a no-fly-zone over Syria. If this were to happen, then Assad would be defeated within a few months. It is 100% the right thing to do. The Jordanian Army has already clashed with Assad's Syrian Army once, the longer this war drags on the wider it will become until it starts consuming oil fields and pushes the global economy into a recession. It is impossible to overstate how positive an American-Turkish no-fly-zone would be. Hillary then has to somehow infuse Obama with a set. This is a big challenge because Obama runs scared before elections.

Assad's army has backed off on trying to take the key Salaheddine district with a massive infantry assault. He is once again standing back and pounding it with heavy weapons. Assad has taken about 90% of Salaheddine and about 50% of Aleppo as a whole. I remind you that the Battle of Aleppo is the most important Long War battle by a huge margin right now. It is everything.

Assad seemingly cannot put soldiers up one for one against the rebels for any length of time because the rebels are willing to die for their cause and Assad's soldiers are not. The rebels have gigantic moral superiority. Assad advantage is the possession of fighter jets, helicopters, artillery, armored personal carriers, and tanks; none of which the rebels have. But setting up a no-fly-zone or giving the rebels advanced manpad missiles will help eliminate Assad's advantage. Small portable missiles are problematic because Al-Qaeda is fighting on the rebels side. A no-fly-zone is the best answer then, but it is the most unlikely politically because only Hillary has a set in the Obama Administration. So you need the CIA and Special Forces in there with missiles.

Painfully We Move Forward

Charts: The broad index has broken out of its 1 1/2 year consolidation channel by trading convincingly above 1370. By that I mean technical indicators like the advance/decline are supportive. In the last few days the market has been flat, volume has been low, which is good. If volume were high in a flat market we would have stalling, which is bearish. Next resistance is 1422. As screwed up as fundies are we still need consolidation and a new channel of 1400-1422 before a true break-out can be considered strong.

The Eurostoxx 600 (European equivalent to the S&P 500) has executed a Golden Cross, where the 50-day line punches up through the 200-day line. This is bullish. However, the S&P 500's 200 day line has gotten pretty high and any sharp downdraft could pierce it, this is a caution flag.

The Hong Kong market is trying to punch up out of a 5-year consolidation pattern and it shows both long term and short term coiling behavior. So it could ratchet up or hurt you bad depending on how it uncoils. You can buy the index with ticker symbol EWH.

Fundamentals: Data out of China is horrible. Bad news is good. The market thinks Beijing will hit the juice and stimulate the crap out of its economy. Maybe. China levered stocks are up today.

Long War: In Syria, Assad's army has pushed the rebels out of the key Salaheddine district in the globally crucially Battle of Aleppo. The media is acting like troop movements and territory are key to this battle. But its really all about supply lines. Assad's army has severed rebel supply lines a couple times only to have them reform. The CIA has built a warren of rebel checkpoints on roads through rebel controlled land stretching from Aleppo to rebel supply bases in Turkey. It seems that Langley has done a bang-up job with all this careful spadework.

Assad's army still has not launched its huge ground invasion of Aleppo. It continues to use heavy weapons, small infantry squads, and snipers to push forward. There is fighting throughout the country, not just Aleppo. One gets the feeling that Assad is afraid to flood Aleppo with a massive numbers of infantrymen because he then would have no reserves to counter rebel attacks throughout the rest of the country. A rock and a hard place. It's a bitch being a tin-pot dictator on the wrong side of the CIA. And yet there is a lot of war to be fought. If push comes to shove, Assad will use chemical weapons.

The rest of the Long War grinds along. In Yemen, Al-Qaeda has mounted a huge terror campaign that is knocking the good guys back. Al-Qaeda affiliate Boko Haram is raising hell in Nigeria. The fighting season in Afghanistan is going poorly.

But the big picture is that the CIA is taking over bit by bit in Afghanistan. There was a high level meeting between Director Petraeus and the leaders of Pakistan's ISI. The ISI is now acting like a whipped puppy after this meeting. Painfully we move forward.

Syrian Civil War

The Battle of Aleppo: Assad's army has almost secured the staging grounds for the infantry assault on the rebel held Salaheddine district. Assad is trying to clear the last rebel toehold out of Damascus to cover his back. As he does this he is pouring everything he's got into the staging grounds. Once he has total control of Damascus, then a huge assault will sweep into Aleppo.

None of this violates the parallel I've been drawing between Aleppo and Stalingrad. I remind you that the Germans conquered 90% of Stalingrad before they were ultimately defeated.

The CIA had been holding back heavy weapons from the rebels because their ranks are infiltrated by Al-Qaeda. Now the heavy weapons are coming through. About 20 soldiers from both sides are dying every day, making this war far and away the biggest among all the global Long War campaigns. This will soon spike up when the big assault is launched.

Russia thinks the rebels might win. It is landing 360 Marines into its Syrian naval base. They will be used to evacuate Russian citizens from Syria if the rebels start winning. Syrians hate Russians and will try to kill them in the aftermath of the war.

Iran thinks the rebels might win. It is saying that it might provide the Afghan Taliban with surface to air missiles at some point in the future. Of course Iran doesn't say it will do this if the rebels win, but that's essentially the point.

Israel sees Iran going into a frenzied chest beating routine at the prospect of its ally Assad getting clobbered and freaks out. Israel is now making the most bellicose noise against Iran in quite some time. Somebody bombed a Palestinian camp in Syria. All the enemies of Israel such as Hezbollah are stirring.

The ripples from the Battle of Aleppo are already surging across the global Long War landscape in a messy and unpredictable fashion. Let us hope President Obama is truly committed to a hands off policy with the CIA because traditional civilian interference right now is a really bad idea.

CIA Wears Awesome Maternity Clothes

Long War: In Syria, Assad's army has been trying to capture the Salaheddine district in the Battle for Aleppo by standing back and reducing the district to rubble with heavy weapons fire. They tried once to send in foot soldiers, but were beaten back. After that they went back to heavy weapons fire, which isn't working. They need to secure a staging ground near the district, strengthen all their supply lines, build up an invasion force inside the staging grounds, and then move in with infantry (foot soldiers)and painfully clear the district one square yard at a time. The bad guys are trying to do all of this as I write.

The rebels have not captured tanks from the bad guys until now. One or more tanks have suddenly been captured by the good guys and were used to attack Assad's staging grounds, disrupting his invasion force. Because the rebels have not used armor until now the bad guys were caught by surprise.

President Obama is admitting that he signed an order earlier in the year instructing the CIA to get involved in the Syrian Civil War. This makes three different statements describing how pregnant the CIA is in the SCW. Each statement admits to a greater degree of pregnancy than the one before like this: "The CIA is only a little bit pregnant. Okay, we are a bit more pregnant than previously thought. Okay, we are even more pregnant, but still you can barely notice with these awesome maternity clothes that we are wearing."

In Afghanistan, Afghan special forces launched a huge raid that resulted in the capture of key intelligence from the Taliban. This too is CIA activity. It may be one of the first signs of Langley's take over of the Afghan War. In this case the liberal cry, "bring our boys home!" is a good one. Of course the liberals don't follow up with a second cry, "Then unleash the clever bastards from Langley without any oversight so they can break all the rules and build up a war lord economy, etc.. etc..."

Don't @%$# With The CIA

The Battle for Aleppo: Assad's Syrian Army is in its third day of attacking the Salaheddine district, the key to the battle. The bad guys are throwing everything they have into the district, blackening the sky with smoke from mortars, artillery shells, missiles from jet fighters and other heavy ordnance. The rebels are absorbing this punishing fire and holding the district, against all odds. The FSA says it is gaining ground around the periphery of the battle, starting a pincer movement to engulf Assad's army as it gets sucked into this hellish firestorm.

Assad's army is tearing apart buildings in the city because of its reliance on heavy weapons. The resulting rubble is giving cover to the rebel fighters, turning the once proud city into a nightmare of urban warfare where tanks and jets are not that useful and the fighting quickly descends into hand-to-hand combat and sniper duels. This is exactly what happened at Stalingrad.

The battle wasn't supposed to be going down like this. The rebels aren't following the playbook that the media and the West laid down for them. This battle was supposed to result in a rebel massacre. War crime courts were geared up to prosecute Assad's people for the expected bloodbath.

Russia is making plans to abandon its naval base in Syria in case it is overrun by rebel fighters. This is Russia's only big overseas military base; Russia's pride and joy. The Russians are looking to build a new base elsewhere. They have approached Cuba and other countries.

Why are all the analysts so wrong about this battle? What is it that they don't understand? They answer is that they don't understand what it means to @$#%& with the CIA.

Welcome To Stalingrad

Syrian Civil War: Moral superiority is an actual military concept. It means one side in a war is willing to take much higher casualties than the other to achieve victory. In this context the phrase does not have any philosophical meaning. The FSA rebels have moral superiority over Assad's army. The bad guys might have kill ratios of 100-1 over the good guys. And yet the good guys are (so far) winning. This is the most horrible and gruesome way to win a war.

The Battle of Aleppo has begun. Both sides are fighting over the Salaheddine district, which is now key. Assad's army said they had captured Salaheddine one day ago after a withering barrage of rockets, mortars, helicopter gunship fire, and fire from the cannons of tanks. Assad's army moved in infantry to hold the ground they thought they'd captured but rebel fighters crawled out of the ruins and repelled the bad guy foot soldiers. Moral superiority.

The German army captured 90% of Stalingrad before losing the battle. The Germans thought the scorecard for victory was how much of the city they had captured and how many Russian soldiers they had killed. The actual scorecard was the condition of the German supply lines. Every German bullet had to be transported over 1000 miles to Stalingrad. If these supply lines were not robust, Germany would and did lose.

Before the Battle of Aleppo the rebels fought hard and secured all the ground necessary for them to maintain supply lines. The rebel supply lines are impregnable. The CIA has publicly admitted that it is running these supply lines.

We don't know the condition of Assad's supply lines. But as the battle unfolds we will find out.

It is very rare for a vastly outgunned army to defeat a technologically advanced army with moral superiority. The last time this happened was about 140 years ago. It can only happen if the outgunned army has a much better and more sophisticated strategy and tactics. The military minds behind the primitive army must be way better than their opponents. Better chess players.

In Stalingrad the Russians had equal technology compared to the Germans. So this is an imperfect analogy.

I'm Sorry For Getting Religious On You.

Charts: The S&P 500 has been in a consolidation channel for 1 1/2 years. Today it moved up to the top of that channel (1370) right after the bell. It moved in and out of resistance at 1370 a dozen times, then punched up through the long term channel. If it trades above 1370 for four days, then the chartsists will say it has achieved a break out.

Long War: A high ranking Syrian general who defected a while ago to join the FSA is painting a very different picture of Assad's army and the looming battle of Aleppo then what I did yesterday. Sorry. General Al-Zobi says the rebels have cut off all supply lines to Assad's army and the bad guys are running out of fuel and rockets. He is hinting that the strategy the rebels are employing in Aleppo is the same that Soviet General Zhukov employed in Stalingrad to destroy Hitler's 6th Army.

Hitler was sucked into Stalingrad. It was a trap, an urban trap. It soon became a death field for the Wehrmacht. Al-Zobi is insinuating that history is repeating itself.

Soviet General Zhukov was considered to be one of the greatest military minds in all of human history. Who is the super-genius at the helm of the FSA? Reuters thinks it has an answer...

Reuters says that the Turks have created a huge "nerve center" that is organizing the FSA. This nerve center is being run (according to Reuters) by the Turks, Saudis, and Qataris. We are told the teeny-tiny Qatari intelligence agency is the brains behind this operation. The high-tech stuff that you would think could only be done by the CIA is (we are told) being done by a vague group of private outside contractors. As you will recall we were also told at the time that the Qataris were running the war in Libya. The mouse is pretending to be an elephant.

I'm not even going to waste my time picking this nonsense apart. If you've been reading this blog for any length of time, then you know exactly what I'm going say about all this happy horse-shit.

All I will say is this... I try not to get too religious when it comes to investing, but today I can't help but fall to my knees and offer this prayer of thanks to the good Lord above, "Dear Lord God Jehovah thank you making the CIA such a bunch of cunning and deceitful bastards. Keep up the good work. Amen."

The Battle Of Aleppo This Weekend

Charts: The broad index has repeatedly tested battleground support at 1333. Today we have a monster rally. This means that the key support level is rock hard and well tested. So the charts look good. The downside is volatility, which is screeching high and makes chart analysis difficult.

Long War: In Syria, Assad's army has cleared most rebel positions out of Damascus in what appears to be a hard fought victory for the bad guys. However the FSA maintains a toehold in the capital city. A huge battle is looming in the largest city, Aleppo. Assad is ringing the city with a wall of armor. Syrian helicopter gunships fill the sky. Assad's military assets are being stripped from all parts of the country. He is throwing everything he has into the Battle of Aleppo, which will probably start this weekend.

The rebels are doing the same thing, pouring in reinforcements, throwing everything they've got into Aleppo, pea-shooters and courage against Soviet T-72 main battle tanks. Currently the rebels control half the city. It is hard to see how they will prevail. But then it is hard to see how Assad will retake the rest of the country after giving it up to win this big battle.

Many experts think Assad doesn't want the rest of the country but is instead going to create a mini-state on the coast for his Alawite clansmen. This might actually be okay.

In Mali, the General in charge of America's Africa Command, Carter Ham, says AQIM (Al-Qaeda North Africa) has become enormously rich and powerful. AQIM controls all of northern Mali, it has its own country, which is bigger than France. General Ham is hinting that CIA drone bases must be built around this gigantic Kingdom-of-Al-Qaeda. And this is likely to happen over the next few years. General Ham is working to whip the African Union in shape to attack AQIM in Mali.

The President of the African Union is now a South African. A sleeping giant is stirring. South Africa has never taken a leadership role like this before. It will take the South African Army to dislodge AQIM from Mali. The building blocks are falling in place for this to happen.

Hellfire Missiles Rain Down From The Heavens

Charts: Yesterday the broad index hit the 50-day moving average, found support and so far today that support is holding. We are balanced on a razor's edge and need desperately for 1333 to hold.

Long War: In Syria, Assad's army is pulling forces from all parts of the country to reinforce his drive into the two largest cities: Aleppo and Damascus. This is a desperate measure. He is giving up everything to hold these two big cities. If he were to establish control in the two cities, then he will have a very hard time fighting outward to retake the rest of the country.

The rebels are taking advantage of Assad's strategy by seizing border crossings, trying to seal off Syria from the rest of the world, preventing Assad from getting weapons and support from abroad.

Syrian prisons have been infiltrated by good guys and jail breaks are occurring. This means Assad's army has to stop fighting the rebels to restore order in these prisons. This is the work of an advanced intelligence agency.

In Yemen, the CIA is stretched thin and AQAP knows it. In June AQAP was totally routed from the little Kingdom-of-Al-Qaeda it had carved out in southern Yemen. AQAP is starting a campaign to reconquer the villages it had been booted out of. But the first bad guy attack was repelled by well-armed and well-trained good guy local militia. So Langley has done some good advanced planning and has forces in place to deal with an expected AQAP push back.

In the Pak Tribal Lands, jihadist gunmen attacked a compound that a top Pakistan Taliban commander had been using. The gunmen killed the Taliban chieftian. Okay, it is time for everybody to admit that the CIA has its own jihadist forces. The Pakistan government sure seems to think so. They are now on their best behavior, using the Pak Air Force once again to strike bad guy positions. NATO supply routes are open and the Pak government is keeping its pie-hole shut about CIA drone strikes.

Speaking of which... The CIA drone campaign is once again roaring ahead full throttle, with Hellfire missiles raining down from the heavens, chewing up bad guy encampments and filling the air with the terrifying sounds and smells of American vengeance.

The CIA Director is a Screw-Up. Not.

Charts: At midday on July 24 the S&P 500 is trading just under 1333 which is both the 50-day moving average and the final Fibonacci retracement level in the series. This is also the bottom of the recent trading channel and a battleground support level. A convincing break below 1333 means the charts are saying a serious correction has begun. I have my puke bucket only inches from my desk and it seems to be calling to me: "Puke, Dave, go ahead, let it out!"

Fundamentals: Yesterday I said Spain will default. But the media is saying Spain will get bailed out like Greece and not default. Newsflash: Greek debt gave investors a 75% haircut, that's called defaulting.

Long War: In their wisdom the international NGOs in Afghanistan gave the Taliban a free pass on poisoning little girls in girls-only-schools. The Taliban of course has infiltrated Afghan security forces. Before the Taliban moles would have to kill themselves to take out honest security personnel; go out in a blaze of fire. Now they are using poison and living to fight another day. Can you see why we need to get the western liberal do-gooders out of Afghanistan?

In Syria, for the first time Assad's Air Force is strafing rebel positions with fighter jets. So FSA rebels armed with AK-47 and itty-bitty grenade launchers are being attacked by main battle tanks, heavy artillery, fighter-bombers, and attack helicopters. Not surprisingly, the good guys are being knocked back.

What possible advantage do the good guys have? What force is on their side against this overwhelming firepower? Consider the following two news items...

Russia is warning Assad not to use chemical weapons. Somebody or something is pressuring the holy crap out of Russia. Who could it be?

The Wall Street Journal ran an article yesterday asserting that the CIA is a little bit more pregnant in the Syrian Civil War than previously admitted, but only by a tiny amount. The article used the word "limited" several times. The CIA is indeed pregnant but only in the most limited manner possible. Then the article highlighted the blunders the CIA supposedly has made in its limited pregnancy. Shipments of arms have gotten through. Langley is not really doing that great of a job, yada yada yada. This is called disinformation.

Today the Wall Street Urinal is running an article asserting that David Petraeus' number one concern is getting a new gym for the spooks at Langley. What a srew-up he must be. Not.

This is what the out-gunned FSA rebels have on their side, the raw genius of the greatest military mind in the world.

Ramadan Violence is Not Good

Fundamentals: Spain is going to need a bail out from the EU and ECB or it is likely to default. Greece has exhausted its bail out funding and it too will probably default on existing debt. Much of Greece's debt has been written down, but it hasn't been written down to zero, so it can obviously still default. The ECB could just print Euros out of thin air and vaporize all this bad debt. This would only work if southern European countries actually implemented free market reforms, giving them the ability to start growing again. But they refuse to make these reforms. So huge injections of ECB funds would just flow into foolish make work projects and wealth transfer schemes. So the fundies look really bad.

Long War: Al-Qaeda in Iraq killed over 100 people today, including dozens of Iraqi soldiers. A while ago the CIA told us quite openly it was pulling all assets out of Iraq. I speculated that the CIA was pouring its Iraqi resources into Syria and wanted to leave a juicy target behind in Iraq for the bad guys to play with, preventing them from getting too heavily involved in the Syrian Civil War. Looks like I was right. The CIA is stretched thin. It can't be everywhere at once and is therefore doing the right thing. The Long War is a nasty business and there are no wonderful Hollywood answers to every problem.

The Muslim majority Mombasa region on Kenya's coast is being infiltrated and taken over by Al-Shabab, the Al-Qaeda affiliate in Somalia. A small guerrilla war is brewing there that will someday explode into a big war. Remember my long term prediction, that jihadist wars will spread down either coast of Africa, forming a gigantic pincer movement that ultimately will be directed at South Africa? Facts on the ground are bearing this prediction out.

At some point the sleeping giant will be awakened. At some point South Africa will rise up and send divisions of Christian soldiers north. The Long War will become more religious and much more bloody when that happens. Scary.

Syria is making statements about when and how it will use chemical weapons. The statements are disinformation of course. The take-away here is that chemical weapons will soon enter the battlefield. Not good.

In Saudi Arabia, Sunni/Shiite violence is increasing on a street level. Violence across the Muslim world is increasing as the Holy month of Ramadan gets underway. It is not good that Ramadan is causing violence to go up rather than the opposite.

Time to analyze the analyst.... Analysts that are good at making forecasts usually have one big weakness: they always get the timing wrong. They think future events they are predicting will happen either too quickly or too slowly. The Long War is moving more quickly than I thought it would.

Evil Fears These 3 Letters: C... I... A...

Syria: The FSA offensive into Damascus saw several thousand rebel fighters infiltrate key sections of the city before the battle had begun. Additionally, a fifth column of anti-Assad civilians living in Damascus had been trained and prepped before the battle. When the main rebel force swept into the urban battlefield the pre-positioned fighters launched a diversionary attack and the fifth column ignited gigantic piles of tires on street corners; all of this occurred some distance from the actual point of attack. This caused Assad's army to defend the wrong locations and get attacked from behind. Furthermore, the assassination of Assad's top military leaders occurred as the battle was being joined. This left Assad's army without leadership at a key moment.

The tactical planning was incredible, the timing and execution was incredibly professional. Compound this with the fact that the rebel army is beating back tanks and helicopter gunships with nothing more than small arms.

You want more evidence that the CIA is running the show? The bomb that killed Assad's top military commanders was clearly set in place by a high level Assad insider and it was detonated remotely with a sophisticated wireless device. So somebody was able to offer this insider a life outside Syria as payment for turning traitor, something the FSA cannot do.

There is a reason why the CIA is only giving the rebels light weapons, namely the rebel army is infiltrated with Al-Qaeda cells and we don't want these bad guys to have sophisticated weapons. As brilliant as Petraeus is, Assad is getting ready to use chemical weapons and it is about to get really hairy in Syria.

The Pak Tribal Lands: A suicide bomber blew up a compound used by a small Taliban militia in the Orakzai tribal region, killing 9 jihadists and wounding 20 more. A jihadist killed a bunch of jihadists. This is further evidence that the CIA has jihadist forces of its own. There is an old saying: "To catch a thief, set a thief."

Jihad sounds like a bad word, doesn't it? The literal English translation is crusade. The two words have identical meanings. They both mean holy war. The CIA has native Islamic forces willing to kill Al-Qaeda and Taliban fighters in the name of Allah, in the name of God. These fighters believe they are clawing back their religion from the clutches of evil, from Satan. If you are an atheist we'll go with the word "evil." Fine, here is the question then: How evil is the Taliban? Please read on...

Afghanistan: The number of girls dying in girl-only-schools has soared this year, hitting all time records. Hundreds of girl students have died from poisoned wells. The handful of foreign NGOs charged with investigating all these deaths have written a report saying the Taliban is not to blame and the deaths are the result of unspecified natural pathogens. The foreign workers for the NGOs were not killed or targeted by the Taliban because of their report, disgusting. They will be leaving when NATO pulls out in 2014 and don't want to stick their necks out. Cowards.

The Taliban is getting ready for the day when NATO pulls out. It wants to send a message to the average citizens of Afghanistan: a new reign of terror is about to begin and you had better bow your heads in submission to us or we will chop them off.

I believe that by then there will be a new breed of jihadist in Afghanistan and the old jihadists will have their hands full. In the first couple years of the Afghan war the Northern Alliance (native war lords) and the CIA totally routed the Taliban. The war went sideways when anti-war lord programs were put in place by the State Department (under Bush) and the Pentagon took over from the CIA. This was a huge mistake. But that mistake will be reversed in 2014 and their will be a new sheriff in town. 2014 is a long ways away and this year's fighting season is not going that great.

Will Dave Be Visited by Men In Black?

Long War: The CIA has just assassinated the head of Assad's Syrian Intelligence. But wait a minute, the media is saying the rebel FSA is doing all these assassinations. In other words, the FSA has suddenly become better than Mossad or any other world class intelligence agency. Remember my analogy about a ten-year old Girl Scout killing 20 Hell's Angels with a pocket knife? (If not, see blog below this one). Okay, now we are to believe the Girl Scout's next move was to jump on her tricycle, peddle to the Hell's Angel headquarters and kill half of its top leadership. That is one bad ass Girl Scout!

The FSA rebel army continues to shred Assad's army. I've said this offensive is being led by Navy SEALs and I am being sloppy here. Sorry. The CIA has its own paramilitary soldiers. They are all former US Special Forces soldiers. But now they work for Langley, not the US Navy. A technicality.

For the first time Russia is hinting that Assad must step down. A while ago Russia agreed to stop selling weapons to Assad. At the time I said the CIA was pressuring Russia in some manner. I went on to say I didn't know how but a couple years ago there seemed to be CIA pressure on China in the form of Langley controlled jihadist terror strikes. I guess I shouldn't have been circumspect with that blog by hinting that I think Langley has its own jihadist forces. For one thing I don't want to have a "Tom Clancy Moment" where I get a knock on the door. Anyway, since I made that hint about potential CIA controlled terror strikes in Russia, that very event has occurred. In the Tararstan region there has been a huge spike in jihadist activity and nobody knows why. This area had been very peaceful until recently. Russia usually only has to deal with Islamic bad guys in the North Caucasus region.

There is no fact checker to turn to when you are analyzing and predicting CIA activity. Langley is the world's greatest liar and it is very difficult to see through the smoke and mirrors. The only report card possible for someone like me is to make predicitions about what will happen if a given theory is true and then wait to see if these predicitions come through. My report card has an "A" on it next to a shiny gold star. I'm leaving my house now before the men in black suits show up.

Will Iran Stick Its Weenie In The Meat Grinder?

Charts: Over the past year and a half the broad index has been in a long term consolidation channel of 1320-1370. It is now at the upper end of that channel. There had been a short term upward sloping trading channel of 1334-1364. The index is now above that short term channel. If it stays above 1370 for 4 days in a row, then the charts are saying there has been a break out. This rosy view would be easier to swallow if volatility stays low. High volatility makes a mockery of chart analysis.

Long War: Off the Coast of Iran: The US Navy is adding a third aircraft carrier battle group to the mighty Persian Gulf flotilla. There are two battle groups there now. These three battle groups are augmented by fleets from 19 allied navies. This gigantic armada is ready to begin a joint naval exercise designed to train it to work as a single unit to remove mines from the Strait of Hormuz, when and if Iran sticks its weenie in the meat grinder.

The Pentagon has almost finished building an anti-ballistic missile shield in the Gulf designed to blow away Iranian missiles. This will shield the Persian Gulf flotilla and allow it to rain holy hell on the bad guys.

The UAE has just finished a $4 billion overland oil pipeline that is now pumping Mideast oil that would have had to have been shipped through the Strait of Hormuz, but now cannot be touched by Iran, which makes a naval engagement in the Gulf much easier for the good guys.

A couple days ago a refueling ship inside one of the Persian Gulf battle groups fired on an Indian fishing boat that looked a little bit like an Iranian attack speedboat if you squinted just right. The fishing boat had nothing to do with Iran, but it was in the wrong place at the wrong time. The Navy did not apologize, instead it said every vessel in the Gulf had better watch its ass because the good guys are not dicking around with Iran any more. This means that the rules of engagement for the Navy have been loosened up to allow for an all-out war.

The full weight of oil sanctions are now hitting Iran. Its economy will soon get so bad that revolution against the regime is possible. This means that as suicidal as it may seem, Iran may attack the mighty armada off its coast. The mouse may attack the lion. But this isn't Aesop's Fables. The mouse will get annihilated.

In Syria: The CIA just assassinated Assad's #1 Defense Minister and his #2 Deputy Defense Minister, dealing a savage blow to the tin pot dictator.

The FSA (good guys) says it is conquering Damascus, the seat of power. The FSA is right. They are winning. They are taking apart Assad's army as if it were an old clock. But its not an old clock; it used to be the most professional army in the Arab world. The media tells us that the FSA is winning because rag tag FSA fighters are taking out Assad's heavy armor with grenade launchers. That's like saying a ten-year-old Girl Scout armed with only a pocket knife has just walked into a biker bar filled with 20 Hell's Angels armed with Uzis. The little girl then start a fight with the bikers. Within minutes she has killed all 20 Hell's Angels. She calmly wipes off the blood, puts her little knife back in her pocket, and sells cookies to the bar patrons that haven't been killed. In the real world that is not possible. In the real world the Girl Scout is a Navy SEAL.

Navy SEALs Kick Nine Yards of Ass

Fundamentals: It is possible that the only realistic engine for global economic growth is China. Therefore we have to dig deeper into the recent GDP data out of China, even though we don't want to. The new methodology eliminates one layer of corrupt government officials, but leaves one layer in place. That makes you think it is about 50% more accurate than the old method.

Private economists have been aware of the kinkiness of Chinese data for years and have come up with their own formulas and methodologies. The best so far is measuring electricity output. This data is not filtered through the government at all and comes to us straight from utilities and consumers like state owned factories. State owned Chinese companies that float shares on the stock market are by and large pretty honest. So here we have good solid data. The most recent Chinese electricity figures show production has been flat quarter on quarter. The GDP data that everybody got so excited about showed an increase well over 7%, not flat. This is very scary.

Long War: In Syria: Independent UN examiners and better media scrutiny than before tells us that the so-called massacre at Tremseh was a simple battle with both sides taking hits, not an atrocity, not a genocide, not a massacre. I said exactly that at the time in this blog the other day. The CIA is manipulating the media in a fantastic manner. Totally awesome.

The rebel FSA army (good guys) is tearing apart Assad Syrian Army (bad guys). The fighting is pushing into the capital city. Assad's army is getting knocked back. This is the most savage fighting yet in the war. The Navy SEALs are kicking nine yards of ass.

Assad has taken all his chemical weapons out of storage and is getting ready to use them. He wants to carve out a separate little country on the coast, where his Alawite clansmen can create a new home and survive the massacre that the Sunni majority will mete out to his people otherwise. In other words, Assad knows he is destined to lose this war and wants to salvage something out of it. That something is the survival of his people. Assad knows what he is up against: the full might of the new Petraeues CIA, a terrifying and implacable foe.

Americans Are Warlike, If Carefully Manipulated

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?

Good Things Happen In The Dark

Charts: I am writing this within a few minutes of the opening bell July 12, so we'll see how the market finishes. At the open key technical support at 1333 was shattered. But the next support level of 1328 held. I eyed my puke bucket but didn't actually vommit, then I pushed away from my screen.

Long War: All the "Arab Spring" elections saw Muslim Brotherhood Islamist candidates winning big time and pro-American secular parties losing. Except in one case: Libya. In Libya, the Muslim Brotherhood was slaughtered in the election last weekend. Rebel military leader Mahmond Jibril will be the next PM of Libya.

Let's backtrack and talk about CIA involvement in the Libya War. Besides Western commandos (Navy SEALs and Green Berets) with phony British accents there is reason to believe that many of the air strikes attributed to NATO war planes actually came from CIA drones. At the time this blog dug into evidence supporting this claim and you can scroll down and reread those old blogs if you want; or just trust me that this was the case. Furthermore, oil production came back in Libya ten times faster than petro analysts expected, further evidence to support my assertion. So there was massive CIA involvement in the Libya War.

Military commander Jibril would have then and still does have massive CIA connections. Now look at the election. Even in the towns and villages with overwhelming jihadist presence, the bad guys still lost.

Yet there is no talk of vote rigging or fraud. Somebody is doing a @#$ good job of keeping the bad guys from running Libya.

There has been almost no Pentagon presence in Libya. Just the spooks at Langley.

Now look at Afghanistan. Eight American soldiers were killed in the last few days there. It's pretty screwed up. Yes, I am sounding like a broken record when I say over and over that the only the CIA can win the Long War, not the Pentagon. But this blog is not supposed to be interesting or entertaining.

In 2014 all NATO troops leave Afghanistan. This will be a good thing, the opposite of what most people believe.