Several people have written to get my take on the market’s current trend. Despite all the excitement around the porkulus bill, the tax cheats appointed to high office (including the IRS — see below), the climbing unemployment rate, the move to protectionism, the bad bank idea, and everything else, the market is steadfastly going…nowhere.
From last weekend’s note to subscribers:
The S&P; 500 has been in a trading range for two months. If we go back three months, we get the following two extreme points on the chart:
1,006 on Nov. 4
752 on Nov. 20Since Nov. 20, these are the two extremes:
935 on Jan. 6
805 on Jan. 20Even that narrow 130-point band is overly generous, however, because most of the last two months has seen the S&P; 500 fluctuate within the even narrower 80-point band between 820 and 900. The only word for that trend is sideways.
Here’s what that looks like on the chart:
The next obvious question becomes: Is that sideways movement base-building for a move higher, or working off the oversold November for another move lower?
I have an opinion on that, and if you can spare a penny I’ll share it with you!
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On that bit about the tax cheat heading up the IRS, here’s what economist Ed Yardeni wrote to clients about President Obama’s budding kleptocracy:
There are only two economic systems: Capitalism and Corruption. It’s time for all of us law-abiding taxpayers to put together a posse of vigilantes to fight Corruption, which is really bad for our businesses. We should round up everyone in the House of Representatives who voted for the stimulus package and put them under house arrest for a year. . . . For goodness sake, even Treasury Secretary Tim Geithner is a tax cheat. The man is now in charge of the IRS! Tom Daschle, the former U.S. Senate Majority Leader picked to be Barack Obama’s Health and Human Services secretary, amended his tax returns for 2005-2007 on January 2, when he also paid $128,203 in back taxes and $11,964 in interest. In September 2008, Rep. Charlie Rangel, the chairman of the House Ways and Means Committee, the committee that basically writes tax legislation, wrote a check for $10,800 to pay the back taxes he owed from rental income on his Dominican Republic villa. If everyone in Washington paid their back taxes, the federal deficit might be significantly smaller. How can all these corrupt people lead us to better times?
