The Powershares Aerospace and Defense ETF (NYSE: PPA) remains in a steady up trend.



Chart Courtesy of StockCharts.com

The government can't connect the dots, but the market is not having any trouble. It's clear that the U.S., and the rest of the civilized world, in one way or another is at war with Al-Qaeda and other groups, formally or otherwise.

Yet, that war is nebulous. It's not always fought in the open. And it's not always certain who is involved, as governments, directly or otherwise are often in league with other groups. Then there is the drug trade, which is intertwined with the terrorist trade, and adds another layer of complexity.

What is clear, though, is that automation, such as the drones that provide intelligence and firepower in Afghanistan and Pakistan, are here to stay. And what is clear is that there are other military developments that are either already quietly deployed or in some stage of development.

Defense companies, like them or not, are now in their sweet spot, as uncertainty is on the rise and the need for surveillance and weaponry is on the rise around the world.

That's why PPA is in a steady up trend, which over the last few weeks has ingored just about every up and down in the market while moving nicely and steadily higher.

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