The following is an excerpt from Richard Russell's Dow Theory newsletter
What ever happened to Obama's promise to reduce our tax returns to a post card that could be filled out in ten minutes? Like so many Obama promises, the post-card promise ended up with zip. Now comes GOP Herman Cain for president with his original 9-9-9 tax plan. Cain proposes scrapping the current tax system entirely and replacing it with a 9% corporate tax, a 9% a personal income tax, and a 9% sales tax. So much for presidential campaign promises.
Would it work? Cain claims his plan would bring in as much money as the current mess, but it would also take a lot of the taxing control away from the politicians. Thus the 999 chances of becoming law, I think, are bleak.
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Angry complaining anti-Wall Street crowds are forming in 250 cities around the world. In some cases there is violence. These down-and-out people are objecting to the gigantic difference in income between themselves and the big wigs of Wall Street, bankers, and leading corporations. It's only started now, but this is an acorn that could grow and grow rapidly. So far, in the main, governments have ignored this new phenomenon.
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Returning to the stock market, below we see the Rydex equal weight ETF for the S&P. Here we see a series of lower tops, suggesting that the majority of stocks are failing to break out to new highs along with the Dow.
Now that the whole world is in "safe" Treasury bonds. The bonds are under pressure. With retail sales up, the bonds are being pressured. The chart below shows the bonds breaking below their latest trendline and testing their 50-day moving average. MACD is negative.
In the meantime, both the Dow and the Transports have broken out top-side of their rectangles. This "should" have been be the signal for higher prices. But in the strange and puzzling market world of 2011, -- who knows?
