Victory for AQAP

Charts: Yesterday's big gain in the S&P 500 came in weak volume. The Nasdaq also had a big gain which came in good volume. It is not clear whether the big up day was a follow through day because of this mixed message. For the S&P 500, 1300 is the 50% retracement of the correction. Because of the mixed message of the maybe follow through day we need to see 1300 conquered to be sure a technical rally is underway.

Fundamentals: The markets are still scared of Greece. The Greek Parliament votes on an austerity budget on Tuesday. If this vote doesn't have a favorable outcome global financial markets will tank.

Long War: On Thursday the House votes on two bills concerning the Libya war. One bill gives the green light to continued military action. The other will end drone missile strikes and other military activity, but allows refueling of NATO fighters. This second bill is toxic since it has Congress sticking its beak in Company business (telling CIA what to do). Furthermore, anything that hurts the war effort in Libya is bad because North Sudan is in a shooting war with tribal militias allied to South Sudan. In other words, North and South Sudan are a heartbeat away from full scale war. So the Libya war is already spilling outward and could enflame the entire region.

Saudi Arabia is trying to cobble together a government in Yemen. There is a shooting war between the Yemeni Army and AQAP. The good guys are being led by deposed Yemeni dictator Saleh's sons. So the media has it wrong, Saleh's government is the only thing holding Al-Qaeda at bay. The Saudis are wisely trying to meld the existing government with strong tribal factions. AQAP had been losing the war but yesterday it broke a hundred or so AQAP fighters out of prison and is rejuvenated. Forget democracy and the Arab Spring, there are two possibilities in Yemen, either it becomes a sort of vassal to Saudi Arabia or it becomes Al-Qaeda central.