Well folks - is this the moment we have all been waiting for (patiently, It's to be hoped!)? "We're on Our Way" - to "pluralise" the Proclaimers' song title.......but where to? Is this truly the beginning of the end of the bear market rally that began back in March of this year, or just the end of the beginning of a new bull market phase? Ah - conundrums - don't you just love 'em? I certainly do! As you'll know of course (and if you don't - shame on you! - go into the corner, face the wall, and read the TTEW manual at least three times before bedtime), we can deal only in "probabilities" when it comes to trading. There are few "certainties" to be found within the trading arena, that's for certain - but one of them is that Mr Market is capable of surprising - and hurting - as many participants as possible. He's as ill natured and unpredictable as a polar bear or a Limousin bull, and like both of these beasties, he can turn on a sixpence and he takes no prisoners..... and for sure, an awful lot of the most recent buyers have been well and truly mauled these past few days. Those who bought a few weeks or months ago of course will now be chanting their usual "justification mantra" that goes something like "Great buying opportunity with lower prices, yeah yeah....." And it's 100% certain that financial salespeople everywhere will be providing the harmony to that silly little ditty.

Anyway - as above - what about the "probabilities" then? Easy enough to answer - this is the end of the bear market rally. Sure, there are going to be retraces along the downwards path, but overall, it's the bears that are about to enjoy the balmy autumn weather as they forage for tasty low - hanging fruit in the meadows.........ah, Williams is feeling all poetic today - it has been a longish wait since March - but make no mistake, the above comments about Mr Market's generally antisocial demeanour could still see plenty of traders get in a real mess by selling "too much, too soon" or by getting really greedy and holding their stop losses far too tight. Just remember that in the same way as potential "buys" were easier to find than "sells" these past few months, so now will "sells" be far more prolific than "buys" - so it's time for a wee warning, touched on above: DON'T BE GREEDY. If ALL you can find are potential "sells" (and I do not accept that will be the case, by the way - you'll just need to look a lot harder for "buys") then don't try to have more than half a dozen or so on the go at the same time. Just because the TTEW money management "rules" suggest no more than the full dozen, that does NOT imply "all in the same direction." You must have a balanced approach, because market action can very easily and quickly turn against you, as suggested above. If you have only a single "buy" on the go, then it's fair enough still to have six or so "sells", but please don't have more than eight "sells" working - and then only if you have three or four "buys" also on the go. And when it comes to the "sells" - you can afford to be even more selective than you usually are! Not that you should EVER reduce your highly selective TTEW approach of course..... (Now this is all "approximate" and YOU need to decide how to balance things. Don't email me about this because it's all pretty obvious really, when you think about it!)

OK - moving along after that "philosophical/psychological" bit, why do I suggest that probabilities now favour the notion that the start of the next major phase of the ongoing bear market is now under way? Lots of things - but only two will suffice! First, the technical "look" of the charts of the major indices like the DJIA etc - as discussed in recent video updates of course, as well as in these ramblngs, and second, the general state of the "bigger picture" - again as discussed often enough here. The rally since March had zero foundation in any kind of "real economy" - it was all predicated upon the "smoke and mirrors" provided by government folly - as in bank bailouts, car scrappage schemes etc etc. Money was simply being "moved around" but where were all the "real jobs" created - those that are essential to real economic growth? Try "Bastiat" in the search engine........Anyway, you have heard it all so often by now in these ramblings that you must be extremely fed up, so it's simply a case now of resting my case and letting the evidence do its job.

Speaking of "evidence" - the case against the two ex Bear Stearns fund managers is well under way in the USA, and as markets again start to fall, it's certain that many more such people will find themselves guests of Uncle Sam.......there are many more bank failures to come, that's for sure - and a whole lot of dodgy dealing still to surface. And still on the "evidence" theme, it's interesting to note that BAE may be about to agree to pay a whopping fine to the UK government, on the basis of admitting no guilt. Ho ho ho. (Try BAE in the search engine.) And still on the "Ho ho ho" theme - Wee Allie the UK chancellor is now backing smartly away from his recent claims that Britain is coming out of recession - it's amazing how wriggly are politicians. If I were not a fly fisher, they would make pretty good bait! Wee Allie and co are on the hook now, that's for sure. The British car scrappage scheme is to be extended it seems, and it would be fair to suggest that with an election looming, more and more desperate measures can be expected in a very costly but totally futile effort to pretend all is well with the economy.

Over in the US of A, things are beginning to unravel sufficiently for Joe Public to be taking a wee bit of notice at long last. Unemployment is at a 26 year high - in California it's at a 70 year high. That particular State is in a sorry state indeed - as mentioned here in the past of course. (Type "California" into the search engine for more.) Now they're looking at sacking another 60000 State employees - and via the search engine you'll note that IOUs are the currency being used to "pay" those still in jobs. Given that California is the eighth biggest economy IN THE WORLD.......not at all funny. "Go figure", as my brother in law so frequently suggests.

On that particular note, it's worthwhile pointing out right now that "things" are very bad indeed throughout the major economies as a whole - even Russia is suffering enough to plan a 300% tax hike on beer sales. It's to "fight alcoholism" of course - it has nothing to do with raising some dosh to placate the odd oligarch or two.....

Anyway, the serious point to make here, is that (as happened last year too of course during the last big drop) there will be some kind of ban implemented on "short selling" - if not of all stocks, certainly of bank and construction ones. As ever of course, this will happen just when markets are about to turn back up anyway - or indeed just AFTER they have started to retrace, so in the context of trading, for the moment at least it's of little concern. But please bear it in mind as 2010 progresses. In due course, as more and more "toxic waste" surfaces worldwide (again a term for the search engine if you're relatively new to these ramblings) and as more and more derivatives are found to be worthless, many financial players will fall by the wayside - not only banks, but also stockbrokers, spread bet companies and the like. Now don't get the wrong idea - this shouldn't be considered as scaremongering and it's a year or two away yet methinks - but for all that, remember always to check what compensation schemes are provided by ANY financial institution in the event of default, before you part with any hard earned cash by way of deposits or margin requirements. And if you have more dosh in any company, than might be covered by their particular scheme, maybe it's an idea to reduce the amount to the relevant level. Now PLEASE - please! DO NOT email me to ask where/how/what to do with your funds. That's for YOU to decide. All that's being suggested here (and indeed it's in the manual!) is by way of a wee reminder to you about "due diligence". It's entirely outwith my remit to do any more than provide this kind of "heads up" from time to time when I think it might be appropriate.

Onward then to an email from my regular correspondent "A.Z" - appropriate enough in fact, given the "Russia" mention above:

"Hello Ian!
I am on a trip to London, currently sitting in nice cosy Moscow airport café. Compared with 2007 there are very few travellers in international departures. I remember I couldn't find a seat free but now there is plenty. Some shops are closed . All show the decline in travel traffic, despite rising markets. Looking forward for the next downwards move of markets !
Regards
A.Z
PS - the plane is only 20% full - not a sign of recovery!"

My reply was:

"That's for sure! Have a safe trip, and enjoy London."

It's fair to say that pretty much all the "evidence" is well and truly stacked against the bulls, at least for the moment, and on that note, let's take a look at a chart or two. First, we'll examine that of Debenhams (thanks, Ken, for the question!) to see if a "sell" below the horizontal support would be valid. Basically, the answer is "Yes, but why bother?" As per the text above, "selective" is the word! And on that note, the next chart today is that of Aveva, which also has some nice horizontal support a wee bit below the current action. Then we'll examine the Dow Jones (DJIA) and the German DAX indices, where both have pretty clearly broken out of their earlier "wedge" formations.

And that's that for this first weekend of October - there will be no video updates on Wednesday by the way, because the Williams entourage is off on its travels again from today until Friday 9th. I won't be checking emails either - so PLEASE don't bother emailing me between these dates. By their nature, mentoring emails go "past their sell - by date" pretty rapidly and I generally empty my inbox equally rapidly on a return after a few days away, if you get my meaning.........and - not that I need to make any kind of excuse - to answer those who ask why I don't check emails while travelling, I don't check emails while I'm travelling......

Anyway, it's off now to the winter quarters for a few weeks, before a mandatory trip to Blighty in November, to visit Daughter Number Two, her husband, and all being well, a new grandchild.

Happy trading then, and I'll speak to you again next weekend!

Ian.

PS - anent the "need to work harder to find potential buy trades" - inter alia, think "defensive stocks" like maybe BAT, and "defence" stocks like Chemring.......

'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'.