The answer - obviously - is "More taxes." So what was the question? No prizes on offer for guessing! Politicians eh? They get you into the mess in the first place, then they blame it all on global warming, then they decide to tax "financial transactions worldwide" to create a magic bullet, allegedly to solve that particular problem - and if you believe that any of the new cash raised WILL go towards helping us cope with rising sea levels and the like - well, there really is no hope for you. Indeed, if you DO believe that's how "even more taxes" will be spent, you might also accept that the word "gullible" has been expunged from all English language dictionaries.......The "new tax" referred to above, is known as a "Tobin tax" - if you have never heard of it, try a Google search. This whole "global warming" thing has been an absolute gift to politicians everywhere of course - and I'm just waiting for an announcement from the Broon one - "Ah'm pleased tae say Ah hiv singlehandedly achieved the end o' too hot an' too cold......"

(If you're a newcomer to these ramblings, or have been living on the planet Zod these past few years, the reference is to Broon's claim as UK chancellor, that he had put an end to "boom and bust". Ho ho ho.)

Anyway, still anent "government con jobs" - what about this "boiler scrappage scheme"? It follows the banger scrappage thing that has already put a whole slew of small UK repair shops out of business (way to go, Allie!). I'm eagerly awaiting the "Swiss Army knife scrappage scheme" myself.

Remaining (loosely) with government - related stuff, you'll know of course that Fitch (a ratings agency) has now downgraded the status of Greek debt, as hinted at here a couple of weeks ago - "the Baltics" will probably be next as the dominos start to fall. It was amusing to note that Irish government ministers are taking a 20% pay cut - sounds good eh - until you work out just how much they had previously awarded themselves. Another ho ho ho.

Onward to "the markets" - and isn't this bear market rally (you know - the one that began in March and has just about everybody breathless with excitement now) holding up well? Seemingly (according to my Yank brother in law who seems to know these things) there are now fewer bears than there were at the top of the markets in 2007......now THAT's a great statistic to be working with, from this ursine character's point of view! The fewer, the merrier in this game. And isn't it interesting to point out to the "buy and hold" brigade that the S&P500 (just to take one major example) is still 23% BELOW where it was at the start of the year 2000? Never mind - another headline is suggesting that the "Private Equity" sector is about to be reborn after having disappeared during the 2007 - early 2009 market collapse, so maybe all will be well after all? In the UK, Carlyle Group is offering for Shanks - and at the other end of the PE pipeline, Alliance Boots is about to come (back) to the stock market via an IPO (initial Public Offering.) Oh dear - quite a few sheep will get taken in, I fear - unless of course time gets in the way there too, in which case the offer won't find an underwriter willing to risk being stuck with a massive loss. "Time" of course has been the recent major challenge to those of bearish disposition - the longer it takes for markets to break down, the easier it becomes to believe all the bullish hype and walk away from one's convictions. Trust me - that would be a very bad move, as will become evident "soon enough" - as in "in the fullness of time" etc etc. "Timing" is a more appropriate word to use, rather than "time" in fact. DIRECTION is easy enough to call - it's the "WHEN" that's the hard part, even for my Really Scary Granny's crystal ball. But don't lose sight of the S&P500 return as mentioned above - and (as in previous WICS) never lose sight of the fact that traders are - or at least should be - very different animals to investors. The latter are pretty adept at a "baaa, baaa" impression, and that is something to shy away from at all costs. "Haaa haaa" sounds a whole lot better to this guy.

Onward then to a few snippets in the "you couldn't make this stuff up, no matter what substance you were abusing" category, and first there's the costly six year "study" by Surrey University that has proved conclusively that on the roads of Britain, four wheels are safer than two. Wow - you would never have guessed. (In Italy, things might be different - the cops there have managed to write off their Lamborghini Gallardo without hitting a cyclist......) And still on the subject of "wheels" - mention was made some time ago in these ramblings that Donington wouldn't be hosting a Formula One Grand Prix - one of the easier predictions from my RSG's crystal ball there!

Next, there was the "lie detector expert" who was caught fibbing to the plod about a speeding offence. A real expert witness for sure. Then there's the claim by Wee Allie the UK chancellor that he is going to "hit tax avoidance hard" - while making 25% of HMRC staff redundant.......company accountants will be shaking in their shoes. And of course there's Allie's proposed windfall tax on City bonuses, which will go ahead "if practical problems, such as defining what constitutes a bonus - can be overcome." Time for another hearty Ho ho ho methinks.

Then of course there's the excellent news that Royal Mail has made an increased profit.......oops - what was that about a pensions deficit? You have "just discovered" a £10bn black hole in the pension fund? Gee whiz - when Pat retires he won't be able to afford cat food.

But the best has been kept till last, in true IW fashion. How about this one for the gold medal? The FSA (Financial Services Authority) has just announced the introduction of "Reverse Stress Testing" whereby banks are to be required to "imagine they have gone bust", then work out why. Has nobody told the FSA folks that the banks actually went bust last year? And that a total of around £850bn of taxpayers' money has had to be pumped in to the system in order to keep the zombies "alive", according to the Audit Office? (of which, quite a lot might have emanated from very dodgy laundering, according to a chap at the UN).... I hear a resounding "crash" as another stable door bangs forlornly in the wind......

OK, on now to an interesting email from "Steve" and my reply thereto. Hopefully it might be of some use to a few of you....

"Hi Ian,

I’m writing to ask your views on the learning curve of a prospective trader

The email in last week's WICS I can relate to in my own experiences. If I’m correct I detected a little anger and frustration in Christian’s email, I too have felt these emotions since I started trading I have now stopped trading, but only on a temporary basis. I have been in what I can only describe as a "downward losing spiral", at first I didn’t realise this and kept trading, but loss after loss, with only a very few winners in between, made me question what I was doing. After searching for the answer I think I might just have identified my problem. I have a mental problem, but more commonly know as psychological. What I have been trying to do since I started trading is anticipate a move in price so that I could make more profit which basically is GREED. My stop loss has never had a structure to it and nearly always gets hit which I put down to FEAR of losing, in hindsight I was always going to be stopped out. My actions I have just described turned into a losing loop which produced loss after loss. Now I have become part of the audience and also I am sitting firmly on my hands By observing the market, and reading, I now understand how you describe "a market mirrors precisely the sum total of the activities of all its participants at any given time". This basically I define as beliefs, a part of the market believes the market is going up and the other believes the opposite. This observation has shown me I need to wait (not anticipate) to see what the majority believe and only then will the majority move the market in a particular direction. Observing as I have been doing for the last couple of weeks I can clearly see where I have been going wrong, but I will only prove my theory when I start to trade again. I would welcome your comments Ian.

Kind Regards

Steve."

My reply was:

"Steve - I believe you have summed things up pretty well for yourself here - no need for further comment from me, basically, other than to suggest you have identified exactly that which holds back so many people, and you are doing exactly the right thing to sort this. Well done indeed!

Ian".

On then to a chart or two, and tonight we'll begin with that of Close Brothers, where the previous uptrend has been well and truly probed to the downside, but there hasn't been much of a retrace, the subsequent action having been a tad too "sideways" to qualify. However, there's a pretty nice triangle and horizontal support to consider now. Then we'll look at Millennium & Copthorne again (last featured in video clip 2896) - the "channel probe" mentioned then has now had its retrace - two thereof in fact - so might a buy order still be worth considering? Next, Templeton Emerging Markets broke nicely upwards out of its triangle, but is it now going to form a rising wedge, thus offering a potential "sell" trade? Finally we'll examine the S&P500 seeing we badmouthed its 10 year track record earlier in today's ramblings. Is it going to keep pleasing "investors" in their desire to "get even", or is it about simply to bounce up off the springboard and plunge into the depths? OK - that's your lot for today - the first flutter of white stuff seems to have arrived, although it may simply be ash from the neighbour's wood stove - must investigate......so all the best till next weekend.

Ian.

PS - another wee epistle from the Yank B - i - L has just arrived, noting the fact that only 165 New York bars applied before the deadline, for a licence to remain open throughout the night of Hogmanay/1st January, compared with 388 last year. It's uncertain how he conducted that piece of research, but it's perhaps indicative of the fact the things on the ground are not quite as rosy as the media might depict.....

'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'.