101st Airborne Division Combat Team Lands In Kandahar

Charts: At one point today the Dow was down almost 1000 points, with midday volume 2000% above average, all stuff for the history books. The Dow then climbed 646 points off its low, chart action that looks like capitulation, a pattern often marking a correction’s low. At the close the broad index was down 3.3%, at 1128. If today’s horrific losses do not mark capitulation, then we may be looking at something worse than a garden variety correction. This means that tomorrow’s chart action must show some strength or we’re all up the creek without a paddle.

Fundamentals: The correction is being fueled by the Greek debt crisis. The big loss Tuesday did have a geopolitical component, but that is now a distant memory. The Greek bailout must still be approved by the German Parliament. The bailout is immensely unpopular in Germany and there is a real chance it could get derailed. German and French banks hold over $100 billion in Greek government debt. A Greek default would tear down these European banks. American banks hold about $1 trillion worth of European debt of various kinds; this is the contagion mechanism for Euro-zone turmoil to hop the Atlantic. Any substantial failure of European and American banks would require huge new government bailouts. Not only might politicians not do this, with government debt loads at all-time highs, they might not be able to. As I’ve said before, a Greek default will make the collapse of Lehman Brothers look like a Sunday picnic.

Geopolitics: 1st Battalion of the 101st Airborne Division’s 2nd Brigade Combat Team is en route to Kandahar. 3000 soldiers from the rest of the 2nd Brigade are gearing up to join them. This is the brigade that will lead the Battle of Kandahar. The 101st lead the Normandy invasion on D-day and is probably the most decorated unit in the American Army. The battle will start in June. It will be the biggest battle of the Afghan war. Almost every US soldier in 2nd Brigade is a hardened combat veteran, many served in Iraq and Afghanistan. Never before has an army gone into battle with rules of engagement that virtually forbid civilian deaths. As a consequence American casualties will be very high. Nevertheless, morale is terrific among the troops. Simply put, these are the greatest soldiers to have ever existed.