Your Very Own Drone Fleet!

Charts: The S&P 500 closed at 1097, down .6%. The market is in a wobbly rally attempt, which is a far cry from being in a technical rally. This is the anatomy of a new rally: The correction’s downward momentum must be broken by a day with big gains in higher volume; that happened Tuesday. After that the market must consolidate its gains for several days; that has not happened. Finally there must be a “follow-through day” to break the consolidation, a big up day in higher volume than the first day of the rally attempt. Only one of these three things has occurred so far. Most rally attempts fail.

Fundamentals: The correction began a few weeks ago when Pres. Obama sprang his most recent financial reforms on the unsuspecting investor community. Today the President reiterated that he is committed to seeing those reforms through to the bitter end. Fear over what the White House will do to banks is hanging over the stock market like a storm cloud. The President also said he is going to push some kind of healthcare expansion, treasury yields went up as a result.

Geopolitics: On Monday the Pak Taliban put out an audio tape where H. Mehsud tells us he is still alive. And he probably was alive two days ago. But reports keep coming in from Tuesday’s giant drone strike indicating it was far and away the biggest strike ever. Eyewitnesses are saying that as many as 9 drones were in the wolf pack, the missiles strikes lasted all day and ranged far and wide. Furthermore, the wolf pack is still in the area and reports of its activities are confused and garbled. Apparently no CIA double agents are sifting through the rubble because anybody doing that is getting blown away by fresh missile salvos. Why would the CIA be so obsessed with this one village? It must be H. Mehsud’s hide out. If H. Mehsud is dead, the Pak Taliban will have a succession struggle where top leaders start killing each other.
Would you like a drone fleet of your own, courtesy of Uncle Sam? The Pak Army and ISI certainly do. The Pak Army says it is blocking key passes in the mountains between Afghanistan and Pakistan to prevent bad guy reinforcements from arriving into Helmand province where NATO is readying a big offensive. In the past the Pak Army and NATO have tried to shove bad guys at each other. Now we see cooperation.