Ah, the Internet eh? Can't live without it these days, can we? But (anent Colin, my excellent webmaster) and his "issues" therewith last week - please bear in mind that (to use an automotive analogy), the Internet can perhaps be compared to the Model T Ford. It is still in its relative infancy and in another twenty or so years, people will be wondering how they ever managed to tolerate all the glitches and breakdowns that happened "back in the old days".......

Speaking of "automotive", it seems that poor old Porsche won't be getting a bailout loan of €175bn from the German state after all. How sad. Big egos eh? It will be just so awful for them to accept they're part of VW. Guys - consider yourselves lucky you're still in business! And Aston Martin is going to produce a "green" city car - nothing at all to do with lowering their average emissions to reduce EU and US tax rates on their gas guzzlers of course. If it's like the rest of their stuff, it will be massively overpriced and underengineered - Toyota engine notwithstanding.

Still on the general topic of "transportation" - National Express has certainly made a monumental mess of its East Coast operation in the UK, as of course you'll already know. Let the guys from Top Gear take over! The National Express head honcho won't suffer of course - he changed platform at the last station and took the connection to the United Arab Emirates, where doubtless he'll create another train wreck. And back to Top Gear - are they losing the plot a little? It's to be hoped not, by this particular petrolhead - but why have they appointed a "failure" to be the new editor of the magazine? The ex editor of NME (New Musical Express) managed to drive down its circulation by more than a little - will he do the same at TG next?

Moving along, the theme this past week seems to have been "utter confusion" as far as "the economy" is concerned. Is it perhaps the case that the more "they" say different things about what's going on, the less interested "you" will become and even more nasty stuff can be swept under the carpet? Who knows? Even my Really Scary Granny would have found it hard to understand some of the nonsense emanating from "Them" over the past few days. For example, the UK's ONS (Office for National Statistics) has decided that "the recession started over a year ago and has further to run". Gosh. But then the new guy at the Bank of England steps up and says that "The worst of the economic downturn is over and house prices are more or less at their lowest." Wow. Then we have Wee Allie the chancellor saying all sorts of things, like he's going to "clamp down on City bonuses." Haven't we heard that one already? Mind you, it's one of these jokes you never tire of hearing again. And returning to "house prices" for a moment, Hometrack and Halifax suggested that they are "rising". The Land Registry says they're "falling." Hmm, whom to believe eh? That's a hard one!

And the Bank for International Settlements (Swiss based "non government organisation") is now suggesting that there are "many hidden perils" still to surface as regards toxic waste. I couldn't agree more. (If you're new to these ramblings and you have a few hours to waste - maybe waiting for a train to Edinburgh? - try "toxic waste" in the WICS search engine.)

Certainly we're arriving at a very interesting juncture now, and my Really Scary Granny's crystal ball is beginning to overheat. (By the way - most of these ramblings focus on Britain and the USA - but if you think YOU are going to be immune from the way things are about to go, just because you don't live in either of these countries.........) Anyway, in Blighty, the Audit Commission top gun won't be getting a peerage from Broon's bunch, that's for sure - doubtless he's thinking ahead, to after the next election however.....He is suggesting that public sector workers should be subject to a pay freeze - so that at least a little of Britain's insane level of debt can be reduced over time. He's absolutely right of course - but already he's taking flak from "the unions". Soon enough, government employees are going to be pretty grateful still to have a job at all, never mind at "frozen" pay levels. I'll bet the Honda workers at Swindon would have been more than happy to have accepted that kind of deal - not to mention all those joining - or soon to join - the dole queue from Lloyds bank - and not a director among them. Seemingly (again from the Audit Commission) in England and Wales there are 32000 more teachers, 100000 more "teaching assistants" (whatever the heck they might be) and 80000 more "support staff" (ditto) than in 1997, but 80000 fewer pupils. Pay freeze or dole queue? Interesting stuff!

In fact, speaking of teachers - as you will know if you have suffered these rants for any length of time (well done, all you masochists!) - I have my own "sources of information", not least my Really Scary Granny's crystal ball. I don't tend to pay a whole lot of attention to "the media", generally for good reason - mostly, financial reporters also write the "agony aunt" column as far as I can see - and probably cover a wee bit of local sport at the weekend as well as operating a premium rate chat line on the side. But here's a link to one of the most perceptive pieces I have seen for a long time - you'll see why I mention "teachers" when you read it. Its writer isn't one of my "sources", by the way!

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5742937/The-unemployment-timebomb-is-quietly-ticking.html

Next, a few wee snippets - seemingly things are all "rosy" again at Marks & Sparks - "a smaller than expected drop in sales" is the report. So that's GOOD news, is it? Gordon Ramsey (a cook who part owns some cafés) is "being forced to pump some of his own cash into his businesses." So?? And the poor chap has had to sell his Ferrari. The MPC (part of the Bank of England) is going to increase "quantitative easing" (in the search engine!) - as if that is going to make any difference. The Serious Fraud Office is going to investigate the alleged "asset stripping" at MG Rover. Again, as if that will make any difference. BP "wins" a big contract to develop an Iraqi oil field. Looking at the price they have had to pay, is "win" the correct way to put it? We'll see. And finally, Lizzie Windsor seems to be having to dip into capital reserves to fund property maintenance. Welcome to the real world, Mrs Windsor! (Mind you, her social benefits will probably just be increased to let her pay the bills...)

OK - before we take a look at some charts, here's an interesting question from "Tony" and my answer thereto:

"Hi Ian,
There is something I would like you to explain to me please.You often mention about not chasing a trade but for instance if you looked at a missed opportunity on a chart when a price had pushed through a definite line of resistance or support a day or so ago and then the price retraced to about the res/sup line, surely it would be valid to get into the trade as you might already have been in it anyway if you had caught it the first time. Wouldn't you consider that you were lucky to get a second
chance? Thanks.

Tony"

My reply was

"'No', is the simple answer. Why not? Because a push like that & then a retrace to the original entry, could indicate that I was lucky not to have got in the first time.......Chasing a trade is the kiss of death to success long term - sure, "that time" the idea might have worked, but then that fact would tempt you to try the same the "the next time", and so on".

Oh yes - just one more thing to say before we look at some charts - a wee reminder (it's in the manual!) that you simply cannot expect all trades to win. A statement of the glaringly obvious for sure - but an awful lot of you recently seem to have lost sight of the fact. In the words of Keynes (the only sensible thing he ever said?), "When the facts change, I change my opinion...etc". Charts that "look like a buy" can turn into a "sell", and vice versa - and often enough, a position that loses in one direction can then evolve into a winner in the opposite direction. Traders can ONLY work in the realm of "probabilities" - there are NO "certainties" in this game. Sure, there have been some cracking winning trades of late - but don't get carried away!

On that note then, on to a few charts, and first today there's a "schematic" one of a horizontal channel, to continue last weekend's theme. Then we'll see possible "real" examples thereof on the charts of the FTSE100 and Stagecoach. If you refer to WICS of exactly a year ago (6th July 08) you'll also be able to see that Stagecoach is a great example of what I mentioned above, reference "the facts changing". You might also care to read the text of that issue - it may be interesting to go back twelve months from time to time and revisit the ramblings - just to compare what the crystal ball was suggesting, with actually happened......Anyway, the final chart today is that of Scottish Mortgage Investment Trust, last featured here on 7th June this year - again, it's by way of "changing facts" and the "protection from a losing trade" that this methodology provided in that particular case.

That's all for this weekend then - hopefully the weather is suiting you, wherever you might be - and I'll see you again next weekend as usual.

All the best

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'.