Well, it just goes to show that sometimes when IW takes his eye off the ball for a few days, "nothing much" is what happens! Usually "something" tends to arise in the markets when I dare to have a day or two away from the screen - but not this time. The "summer of madness" mentioned a few times in recent ramblings, has morphed into the "autumn of madness" but that's all. The Broon one has saved the world - or maybe he has saved only the bankers - by being nasty at the G20 meeting mentioned the other week and refusing to co-operate with the much - touted "curbs on bankers" proposed regulations. That was a huge surprise...... And during the coming week he'll be telling the British TUC that "We're on the road to recovery". Ho ho. Wee Allie the UK chancellor has announced that "We'll keep spending - the cure is working." Hmm - try the word "artery" in the WICS search engine........ Oh yes, and the NIESR has announced that the UK recession "ended in May." Behind the curve a wee bit? Or maybe just so far ahead of themselves they have bashed into their own rear end?

Anyway, it's still "business as usual" (another phrase for the search engine if you have nothing better to do with your time) - the stockbrokers and insurance salespeople of the world are making hay despite the rain: "You'll never get a better buying opportunity - if you don't jump in right now, prices will run away from you and you'll never be able to get anything this cheap, ever again....." etc etc. Indeed, one or two of you good people seem to be imbibing some of that particular brand of snake oil, judging by several emails received while I was away. (Tut tut - please don't email me if you know I'm away - you know the rules!) Here's an example of what some of you have been saying:

"Hi Ian - I hope you're enjoying your break. When you get back, could you explain why markets are still rising, despite all your gloomy predictions to the contrary? Surely this is a new bull market now, and you are just plain wrong? Thanks, Kevin."

My reply was:

"Kevin, you are as entitled to your view as I am to mine - and mine is still as it was before I took a few days off. Nothing at all has happened that would cause me to alter my view that we're in the latter stages of a major bear market rally. Such rallies have occurred many times over the years, and every single time, the pundits get all excited and declare that "this time it's different" and that "it's a new bull market." You can be forgiven for believing the hype, because there are fewer and fewer voices prepared to be properly analytical, the longer the rally persists. But there is absolutely no sound economic basis to suggest that "this time, it really IS different". Being objective is NOT being "gloomy"! I don't want to repeat all the old arguments discussed in many issues of WICS, but I suggest you have a good read through several of the recent ones. What is happening currently is entirely consistent with a growing belief among the sheep, that if they fail to buy now, they will have missed the boat for ever - a fear of missing out, and the good old-fashioned greed that accompanies that emotion, are overcoming the instinct to "wait for a retrace". Many people now believe there will be NO retrace - so they're jumping in, come what may, and that is causing (and may continue to cause for a wee while yet) a strong upwards momentum. It's at times like these when the market (as ever!) in due course will do the maximum damage to the largest number of participants........but as above, we're all entitled to our own opinion. Ian."

On the same theme, M&A (merger & acquisition) fever is once again gripping the markets, with juicy Ms Orange marrying big strong Mr T, and sweet little Miss Cadbury being courted by cheesy old Mr Kraft. Remember Taylor Wimpey? - that's one for the WICS search engine for sure! Ah, "shareholder value" eh? Oxymoron is alive and well.

And speaking of couples, JJB and Sports Direct have allegedly been living in sin. Price fixing? Hard to believe, surely....?

Then there's the MG Rover thing mentioned here on July 5th this year - will the "Phoenix Four" be prosecuted for the alleged skimming off of £42m while the company was destroyed? Hmmm - and the government report into that particular mess has seemingly cost the taxpayer a mere £16m. For goodness' sake - how can a report cost that much? They must surely have been writing it on watermarked paper........

Over in the US of A, Harvard and Yale endowment funds are "down 30%" according to their accountants. Maybe a wee visit to WICS of August 5th 2007 is called for, to get more of the context? And speaking of education, shame on you for not noticing that despite a promise to do so, I failed to mention in the previous issue of these ramblings, why "girls do better than boys" (WICS of August 23rd this year). Anyway, here is the explanation now: girls tend to do much better in exams than boys, because they understand the concept of "deferred gratification." In other words, they appreciate the fact that a bit of hard work and studying now, will benefit them at some future date. Boys on the other hand, tend to have enough self confidence/self delusion to think that "things will work out OK so we'll just go and play football now. Studying is uncool." And here in the unforgiving world of trading, many of the ladies are totally prepared to put in many hours of work at the start of a career, whereas some of the gents have more of a belief that the money will "just appear" via some kind of process of osmosis. There are of course loads of exceptions and it's indeed gratifying to receive so many emails from successful "students" of both sexes. But be assured, there are NO shortcuts to long term trading success!

On a broadly similar note, here's another email, this time from "Paul" - it shows a thoughtful approach and a bit of "self analysis" which is worth sharing with you:

"Hi Ian
Hope you are well, this is my first email since being with you for about 8 months.
I just wanted to express what I have learned (albeit some of it the hard way) which I thought if nothing else would help me as I write it, to summarise for my own benefit what I have learnt (if you have any feedback
and comments on this then any would be greatly appreciated).
So here goes............
Learnings
Absolutely stick to the principles of not risking more than 4% of your pot on a trade, I learnt rather painfully by taking a trade on the FTSE 100 and 250 that were well over 20% of my pot each!! Ouch.
Not to go on any gut feelings I have (I say this as I have no experience in the financial markets other than through my recent experiences and therefore cannot afford the luxury of going with my gut feelings).
Stop loss placements are critical as I have experienced with volatile trades such as FTSE, Tesco etc, where I have not thought it through enough and been caught out.
Hindsight is a wonderful thing!
When I close a successful trade or an unsuccessful one to stop for a moment and ask my self why was it so and what were the learnings.
Do not pick up any brochures about fast cars, expensive houses or motorboats, concentrate on one putting foot in front of the other and don't plan to retire in 6 months time.
Don't get itchy figures when you feel you are not doing enough trades, as trades made just because you think you should be in to something are ill advised.
Don't get over confident when you have successes as this often leads to poor trading decisions in your next trades.
Yours, Paul."

My reply was a brief one:

"Paul - agreed 100%!"

That's the kind of sensible thinking that we ALL need to do, in order to keep our feet in this topsy - turvy environment, whether we are total newcomers or as long in the tooth as IW!

OK - on to a chart or two and first we'll look at the effect of the proposal of marriage on the shares of Cadbury and Kraft, mentioned above. Would you order a trade now, based on the look of either chart? Then we'll examine both horizontal resistance and a rising wedge on the chart of Tullett Prebon - potentially conflicting signals, or a matter of both a buy and a sell order working? Finally there's a wee update of the DAX wedge, last mentioned here on August 30th.

That's all for this weekend, and I'll speak to you again next Sunday as usual - happy researching/analysing - maybe even trading? until then!

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'.