The Market's Going Nowhere

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. 20

Since Nov. 20, these are the two extremes:

935 on Jan. 6
805 on Jan. 20

Even 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?

Comments

[Moon Kil Woong:]

I enjoy your quote that there is only 2 economic systems: capital and corruption. What I am seeing in America these days is not what you can call capitalism and plenty of corruption.

We should be thankful the market is in a trading range. It seems to be going nowhere just like Bernie in his swanky apartment. Are these crooks untouchable or something. We are all really starting to wonder. Does he have a blacklist of every corrupt network on Wall Street he's threatening to reveal?

Feb 05 05:42 AM

[mike4130:]

With the government running the banks you can be sure the worst is far from over.

Feb 05 05:59 AM

[freefall51:]

That is the word of the year: Kleptokracy!

Feb 05 07:42 AM

[kelm:]

US stocks, and most of the world's equities are fundamentally impaired. Even the day traders I know are being driven nuts by the meandering of his market. However, looking at all of the talking heads on CNBC there is a pleading that is evident in their words of "just buy something". That desperation together with a chart pattern that finally looks like something that presages a further decline leads me to believe this market is going lower sooner rather than later.

Feb 05 10:11 AM

[Jason Rines...:]

I built this rough plan in August about assisting the citizenship with voter revolution. America has been here before in three other times in history. All same root cause and effect with House of Rep reelection rates dropping from 92% average to 75% four years after the start of each depressionary event.

ragingdebate.com/about

Phase 1 was to connect with other emerging economic leadership and form a loose think thank. We are now pooling some resources.

Phase 2 is begin the debates with the first two being Nationalize or RTC2 and the Deflation/Inflation debate. I'll be inviting the think tank and public to this debate sometime this month, hoping for two weeks out for the first one. The blogging technology that exists at this site and other financial sites do not facilitate the functionality to host such debates. Lots of small things that are prohibitive such as either requiring a user to fully register to conduct fly-by blogging, can't find a registration area, outsourced tech buggy, vaporized posts, unsecure areas, lack of specific groups, no easy reply method for users to come back next day and rejoin debate. No real debate format (such as podcast and real-time voting, tabulation and no storage area of information to refer back to later in the debate such as case studies of relevant articles to quantify the communities educated opinions about a topic if group was right or wrong. I could go on but let's say my contribution to America is solving such technical problems to facilitate economic debates.

Phase 3 depends on election timing such as 2010 on Senate races and 2012 on Congressional. The citizenship takes a bit of time out of necessity to start conducting research. We in the business community can be of great service educating the public but we're just entering a new phase of business community willing to collaberate and lend resources.

Feb 05 10:19 AM

[KSengineer:]

I think the posse idea has some merrit. Until the law respecting people of this once great country get riled up enough to do something significant, the crooks will continue to grab power.

Feb 05 10:36 AM

[Larry House:]

Jason, while no one can know for sure, of course, I have to agree totally with your thesis. We are in unchartered territory, our financial system is broken, and we don't have the leadership to get us going. We are adrift with no port in sight.

Feb 05 10:49 AM

[AndrewBaker:]

Too many of our capitalists are corrupt: that's why we are where we are. The Madoff Ponzi is just the tip of the iceberg that showed itself because it had run its course and would have been exposed anyway, without Madoff holding up his hand (and a clip artist owning up suggests a scam to reduce the severity of the eventual penalty). The truth is, the best cons you never hear about, which is what makes them the best, of course! We've now seen how financiers rip us off by inventing product that pays them a fortune whilst destroying ours. The losses we have to bear on the value of our homes, investments and the near nil return on our cash are a direct result of not only the cons we now know about but those that we don't, too. Politicians with even less financial acumen than the financial grifters are now in on the act. I want to suggest a way out, but can't think of one that won't hurt more. We've a long way to go, and my hope is that on that journey we get to know more about how to stop the financial and political fraudsters from being able to repeat this trick again.

Feb 05 02:04 PM

[henarl:]

Corruption is not an economic system. Rather, corruption is endemic in ALL economic systems, whether they be Capitalism, Socialism, Fascism, Tribalism, or what have you, because corruption is endemic in the human psyche.

Feb 05 03:19 PM

[johnthegeni...:]

henarl at least makes sense. Jason? Not so much...

Feb 05 08:52 PM

[sr9web:]

porkulus

Feb 06 12:27 AM