Apologies to the late, great Hank Williams (no relation!) this weekend: "Ah got the bear market rally, total impati - ence blues, Ma tradin' finger's itchy an' Ah cain't make it lie down for a snooze...." Or as Eddie Cochrane might have put it, "There ain't no cure for the need to trade blues..." Except of course there IS a cure. It's called "running out of cash." Type "impatience" into the search engine if you believe the above wee ditties might possibly be directed at YOU.

Anyway, the current dog days won't last that much longer and things will soon resume a trend pattern that's a tad less sideways overall. "Up" or "down"? Hmmm - that's a hard one. Let's see - the USA has just posted its first drop in GDP since 2001. Unemployment is steadily rising. House prices are still collapsing. Repossessions are running out of control. Way out west, Arnie is proposing a pay cut for 200000 state employees, to below California's current minimum wage. And as for the banks - ah, the banks! More about them below.... On this side of the pond, we can note that 20000 public sector jobs have gone this year. PUBLIC sector, note! Those will have been just some (an insignificant number unless YOU happen to be one of those affected) of the jobs created out of thin air during these last ten years or so of the "Broon Baseless Boom". House prices are collapsing. Retailers have just finished their "worst month in 25 years" according to the CBI. BT's pension fund is back in the red. British Airways head guy says "This is the worst ever trading environment." Energy prices are being increased by rather a lot. What is there to be impatient about? Do you REALLY think the markets are NOT going to fall off a cliff some time in the fairly near future? (Just remember though, that no matter how far the overall market might drop, there WILL be stocks that rise in price, as has been mentioned often enough in these ramblings - so it's a case, as always, of studying each chart in the usual manner, looking for the clues as to what might "probably" happen next in EITHER direction.)

Okay - back to the banks then. What about them? All these "writedowns" last week from HBOS, Lloyds, Alliance & Leicester. Don't you just love the term "writedown"? It implies these alleged assets might one day be "written up" again. What a con. A message to bankers everywhere - the correct word is "writeoff" - as in "wreck". And all the talking heads are saying that "the worst is over in the banking sector." Well, IW has his own view of that statement, that's for sure. Early last autumn, I recall that intellectual colossus Bernanke suggesting that the total likely exposure to toxic waste within the banking sector, was "probably about $50bn." To date around $400bn appears to have surfaced and the IMF is of the view that there's maybe another $600bn or so still to be kicked out of the woodpile - although in the case of banks, "dungheap" might actually be a more accurate word than "woodpile" - but of course I'm much too polite to use it. (If you're a bit confused, type "toxic waste" into the search engine and follow the story back for a while.) In the USA, Merrill Lynch has distinguished itself by becoming the first bank to have seen an actual value placed on its particular pile of malodorous material. To date it has managed to "write down" a mere $46bn of "assets" - accounting more or less singlehandedly for all of Uncle Ben's optimistic prediction - and has now achieved the dubious honour of having sold some of its toxic waste to a hedge fund, apparently for 22c on the dollar. 22% of its perceived "worth" eh? Not great, but not that awful either in these straitened times.....ah, but there's a catch. Lone Star (the hedge fund) has insisted upon - and acquired - a guarantee from Merrill that any future losses above a certain figure will be fully covered by Merrill Lynch. THAT fact values the sale at around 5c on the dollar. Aren't bankers such clever folks? And all with other people's money too - mostly yours and mine! And of course if Merrill were to go bust, how would they be able to honour the guarantee anyway? Yet TV/newspaper pundits, as well as financial salespeople, are all saying it's time to buy? Ho Ho Ho. Another case for bringing out the big white beard and the red suit and popping down to the grotto methinks - our neighbours must wonder about IW a bit from time to time......and as regards mortgage lending, I just loved a US newspaper headline regarding the Yank government's recent "bailout" of Freddie Mac and Fannie Mae (try the search engine if you don't know who they are): "Freddie and Fannie Live to Die Another Day." How clever, and how true.

Moving along, one of you asked the other week for ideas about how to cope with losing trades, and I suggested that if you think of losers as "business expenses" you won't go far wrong. After all, if you're not running this whole trading thing as a business, then you're not in business! And in any business, there are costs. If you have (say) a legal practice, then you have either rent or property upkeep to consider, probably at least one secretarial wage to pay, phone bills, heating bills - you get the idea of course. As a trader working from home, that type of business overhead will be a whole lot less - you still have fixed costs of course, but overall they shouldn't be that high - and your losing trades are nothing more than part of your variable costs. It's that simple. The markets are NOT "getting at you" when you incur a trading loss. You absolutely MUST NOT think like that, because it leads to one of the fatal trading diseases called "gettingevenitis". Think about it.

Moving along, we see that according to RICS, arable farmland prices in the UK have gone up 47% over the past 12 months, so not all property is collapsing in value. Seemingly (and totally predictably to this son of the soil) the price hike is not being fuelled by City bonuses, but by famers anxious to expand due to the generally rising commodity prices. Banks were willing enough to lend against decent security of course, until about October last year - and methinks much of the data comes from back then. However, farmers ALWAYS buy at peaks and they ALWAYS compete with their neighbour to be bigger and better. It has always been thus. That's why a shortage of anything is followed a year or two later by a glut and a subsequent collapse in values. Ask any pig farmer if you don't believe me. And when times are good, only the very prudent put something away for when the rain appears - generally in a boom, machinery dealers rub their hands in glee.....farmers' sons in particular, MUST have the latest gear - especially if the neighbour's son is seen to be posing around in a shiny new
Superturbosatnavguidedshuttlegearallwheeldriveelectronictouchcontrol 400 horsepower behemoth - which is so heavy it compacts the ground to the extent that crop yields suffer.... if any farmers are reading these observations, I suspect there will be a wry chuckle or two, because the truth will be recognised but in true farming fashion, it won't be taken as an insult. Bankers, on the other hand.......

Anyway, on to a scam or two. It seems "scientists" somewhere have invented an "exercise pill" that you take instead of going for a workout. Apparently it will provide the same effect on muscles as would a session in the gym. Hmmm - where did "no gain without pain" go? Ah - I know! The pill will be an especially large one, and it's the throat muscles it's going to tone. To be fair, it's all in the early stages of development but for all that, methinks a decent walk would do a lot more good.

Moving on, a scam that really gets to me is a certain "classic car" magazine's promotion of so - called "security numbers", where as an advertiser you can mask your own phone number by using one of theirs, at "no charge". That's "no charge" to the advertiser, but "a small extra cost of under 20p a minute" to the enquirer. Listen (if anyone working for said mag is reading this) - that is simply a con to put extra funds in YOUR company's pockets. "Under 20p extra a minute" indeed! That can add up to a whole hill of beans when you think about it. Some of you will know that IW is a bit of a petrolhead - and sometimes seeks to buy different/more wheels - but I will NOT phone anyone on such a number - so if you're currently trying to sell a 1960s xxxxxxx, you have just lost a potential customer for it. Oh yes, and while I'm at it - a wee note to all you "purveyors of previously enjoyed conveyances" - you are used car salespeople. Why try to pretend you're posh? What's wrong with being a used car salesman? Whether it's a Bentley or a Tata that you sell, if you do an honest job why feel defensive about it? Goodness me, there are even a few decent hardworking estate agents out there! Bankers however are a different kettle of fish.... And as for used car ads with no prices, or "POA", or even worse, "Price - ask" - you will NEVER get me as a customer. Not a chance. Why not? Work it out for yourself if you can be bothered. And as for Donington Park ever hosting Formula One again - not a chance of that happening either!

Finally re potential scams/dodgy dealings, it seems the USA's rather inaccurately named "Environmental Protection Agency" has banned its staff from speaking to anyone - including its own internal auditors......is that smelly or what?

Next, an email from one of you - thanks David - that might be of some interest to everyone:

From: David

To: Ian Williams

Hi Ian

Keller Gp looks poised for a classic buy if it breaches the resistance. However it is a company in heavy construction, which I imagine would not be prospering in the current economic climate. The signal looks strong, so how much weight should we give to the overall economic picture when making a trading decision?

Best wishes

David

My reply was:

David - good question. If the chart looks fine then that 'trumps' economic issues because who knows what's going on in the background with any specific company? Maybe they're about to sign a deal with the Chinese, for example? (I have no idea but the point is that the chart is what matters, not the news. Prices almost always have acted BEFORE news comes out - it's not per conventional wisdom where people would have you believe prices ALWAYS react to events. Sometimes, yes, but rarely.)

Ian.

In fact, we'll take a look at the Keller chart below, just to see what we make of it. Before we do - a word of advice if you're planning to buy a tent or a bike - wait till later this year then have a look through the small ads in your local paper, or try ebay or craigslist. I'll bet there will be zillions for sale at tiny prices....

OK - on to the charts and as above, first we'll see what Keller is looking like as it hits strong horizontal resistance. Then we'll consider why a pawnbroker (Albemarle & Bond) might have seen its price push strongly upwards recently - a classic example of a bear market rally, or something else altogether? And then there's Cattles - another example of a typical dead cat bounce channel formation perhaps? And finally, continuing the channel theme, which way will Premier Farnell head? Up, down, or sideways for ever?

That's your lot for today then - time to enjoy the glorious weather and avoid the (far fewer than usual) tourists by putting in an afternoon's hard work snoozing in the shade of the walnut tree, so all the best till next weekend.
Ian

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.