Will 2011 Capital Gains Tax changes put a nail in the US stock market?

There has been some discussion going around about how the 2011 Capital Gains tax increases will impact market performance into the fall.

Since 2008, individuals in the two lowest tax brackets paid 0 percent long-term capital gains tax while everyone else paid 15 percent. In 2011, individuals in the lowest tax bracket will pay 10 percent while the rest will pay 20 percent.

Additionally, the article goes on to state an interesting strategy that make impact end of year trading choices and make for a nice "January Effect":

One interesting idea for buy-and-hold investors is to sell stock gains at the last possible trading day of 2010 and immediately buy it back in 2011. By doing so, investors can lock in existing gains at a lower capital gains tax rate and still keep the investment.

For example, if the cost basis is $10 and the investor sells it for $20 on the last trading day of 2010, his $10 gain will be taxed at the 2010 rate (which is zero for some lower income individuals). If he immediately buys it back on the first trading day of 2011, he now owns the stock at the new cost basis of $20 (assuming no change in price) and the $10 original gain is forever locked in at the 2010 tax rate.

Capital Gains going up in 2011

Here is a re-post of an interesting chart that was placed in a previous comment (Thanks PPP** for the chart!)

Interesting S&P prediction

Also, I looked at the VIX chart and it's seemingly showing it's ready for a renewed uptrend. Will JP Morgan's earnings tomorrow disappoint?

Daily chart.. insert VXX

I should probably repost an article that discusses JP Morgan's earnings and how it far underperforms what should be expected from a bank with a near trillion dollar balance sheet:

He suggests we not be fooled by recent earnings reports or government stats, pointing to U.S. bank earnings as especially inaccurate. JP Morgan has a balance sheet of $1 trillion and can borrow at essentially zero, he notes. So if they just go out and buy 10-year bonds at 3% they should be able to earn $30 billion a year. Yet the bank announced a profit of $3.3 billion last quarter.

"What does that tell you? It says they are losing money on everything else," Das says. "Strip out the gifts, and it's big net loss." And at big industrial concerns like General Electric, he argues, revenue growth is anemic -- so earnings growth is solely stemming from cost-cutting and layoffs.

Comment on JPM is about 1/2 way into the article

That's about 1/2 of what JPM should be receiving as an annual return were it SOLELY INVESTED in 3% T-bills. Certainly not the sign of a healthy balance sheet.

Anyway.. got some family drama going on right now.. so need to cut this short.. But speaking of "shorts", I'll be looking at re-entering one tomorrow. But again, I'm not yet convinced whether this retracement will lead to the "Big Kahuna".. But review PPP**'s chart and let's see it it prove prophetic.

Scrutinizer