Hello again from a glorious sunny day here in the mountains - but there is no plan to rush to complete these ramblings and wax up the skis, so you needn't feel short - changed - even if today's offering consists mainly of "snippets" - that's simply because there have been so many "snippets" to comment upon, over the past few days! Anyway, with the English schools' mid term break coinciding with the same thing for the greater Paris area, there will be mayhem on the slopes today and for the remainder of the month so this fella will be more than happy just to sit out the busiest skiing day of the season - just had a wee glance at the relevant webcams and you can hardly see the snow for the punters....aaghh. Not to worry - with around three metres' depth of white stuff and ongoing cold weather forecast for the next couple of weeks, there's going to be plenty snow left for the Williams gang once the low season recommences in early March - expect somewhat slower replies to your mentoring questions from then on!

Anyway, enough of my troubles, and on to matters of greater interest.

First, it was interesting to note that Wee Allie (UK chancellor, allegedly) has deferred the traditional March budget till 22nd April this year - that will probably be to give him a chance to consult beforehand with the Easter Bunny. And speaking of bankers ("Really, must you?" - I hear you groan) it was amusing to note the big, huge, mega apology from Goodwin and co in front of that committee of MPs the other day. They were just so utterly and abjectly sorry for ........what, exactly? Having been found out to be total idiots, and being monumentally greedy and arrogant to boot? It was good to hear them suggest "We are so utterly sorry that we will hand back masses and masses of our own ill - gotten loot, and on top of that, we'll undertake voluntary community service and do the shopping for old folk - and clean toilets, and.....and how about if we scrub chewing gum off pavements...?" Or maybe the apology didn't quite go that far? What a bunch - not that the UK government is any better at coming clean and saying "Sorry - we have totally screwed things up on just about every level." The Broon one still accepts nae blame for anything - seemingly the whole mess was caused entirely by these nasty Lehman Brothers in the USA. Oh dear - I seem to recall Messrs Lehman arrived a tad late at the strip poker party in fact - they only admitted to their nakedness last September, did they not? And the Bank of England head person isn't in an apologetic mood either, with his claims that nobody could have foreseen the economic meltdown, least of all himself.....the name of a country rock group comes to mind, Mervyn, to describe your situation then - "Asleep at the Wheel" - or (perhaps more likely?) you too are an abject, arrogant liar. Merv is pretty good with the glaringly obvious though, judging by his comments these past few days: "Britain is in a deep recession." Then there was "Interest rates don't need to go to zero because we're at a point now where it doesn't make a great deal of difference." Wow. And finally "What we need to do is develop a new range of instruments (to tackle the recession)". Gosh, what instruments do you have in mind, Mervyn? Probably a really, really big shovel to dig an even deeper hole even faster? Those likely to wield these "different instruments" certainly wouldn't have the coordination of hand, eye and brain to cope with a JCB - so a bigger shovel it probably is. Doubtless a whole new government department will be needed in order to develop an exact shovel specification. Broon was banging on about "sweeping away the bonus culture" at the start of the week so maybe it will become the Department for Brushes and Shovels? The only "sweeping" the Broon one seems fit for, might be the litter from Woolies corner? - Oops - there are no longer any Woolies corners left now, are there? (Was that maybe just a "Scottish thing" anyway? When Ah were a lad, every Scottish town seemed to have a gathering place for layabouts, outside Woolies' front entrance, which always seemed to occupy the junction of two streets...)

Summing up the above - and as mentioned here last weekend, there will certainly be plenty jobs on the go for scapegoats judging by the lack of willingness by anyone "in power" to accept any responsibility for anything. Try "It wisnae me, Miss" in the WICS search engine......and the next load of job vacancies will be for whistleblowers....and I don't mean referees....it's all about the blame game now!

On to a few more "bits and pieces" then, intermingled with the odd scam - and surely the gold medal for this year's scams is currently held by the UK's home secretary? It's a longish story - try Google with "Jacqui Smith expenses" for more about Jacqboot Jacqui's nice little earner.....oops - it's all perfectly legal of course - my apologies if it sounds like I'm inferring otherwise....isn't it good to know that some of us CAN apologise, eh?

Next, it seems the tourist authorities on the Costa Brava have been using photos of a Caribbean beach in their publicity material - a bit of a scam (empty beaches and miles of golden sand) or just poetic licence? You can't trust anyone these days....

Then there's the London Olympics thingie, and seemingly the "legacy" thereof will include an "extra 10000 new homes". Remind me please - how do you spell "ghetto"? And let's not forget the "Olympics University"...on the other hand, forgetting it might be a great idea.

Then there's the senior British civil servants and their accepting of "corporate hospitality". It seems the head of the Ministry of Silly Walks - sorry - the Department for Business and Regulatory Reform - managed to attend 52 junkets in 2008, as the guest of Big Bizness. You can decide the morality/ethical standards involved in that.......oops - is that a smidgen of "outrage" from IW? Surely not!

Moving back to statements of the blinkin' obvious, the head of the Institution of Mechanical Engineers (speaking about the implications of global warming anent the eventual flooding of much of London etc etc) suggested that one of the problems in dealing with such matters is that "Politicians tend to be focused on short term actions." Yes indeed.

And the head of the recently set up financial services compensation scheme thingie is looking for more dosh to be handed over by (innocent) building societies, at the expense of course of their (innocent) members. She says "The levy is not welcome news for building societies." Well, there's a revelation then. But by way of a sweetener, she also says "But we'll be vigorously pursuing recoveries from the failed firms to help offset the costs..." In your dreams, madam - just as "in your dreams" also applied to those who tried to sue the UK government for having nicked their Northern Wreck shares on the cheap. There was never the ghost of a chance of success there. (Try the search engine with both "Northern Rock lawsuit" and "sue government" - you may also find quite a lot that gives the lie to the Broon one's claim that the mess in the UK all began in September 08 or so..........)

Then we have Hammerson (Real Estate Investment Trust) trying for a rights issue to "rebuild its balance sheet"...ho ho. "Get some liquid cash from the patsies, to repay investors who want to remove what little they have left, without needing to sell another property at a fire sale price" perhaps would be a more accurate assessment? We have discussed REITs before in these ramblings of course - British Land, Land Securities etc. A "good buy" at the moment, or a "goodbye"? We'll see!

Finally, what about Lloyds and HBOS then? Gosh, there must have been a whole lot of "due diligence" carried out by the former before it married the latter eh? Only £10bn extra mess they didn't discover before the shotgun wedding. What a bunch - step forward, all you happy British taxpayers.....your pockets are once again about to be picked, if you have anything left in them of course.

Anyway, on to a couple of emails received during the week. The first concerns "the psychology of round numbers" and it's a good example to use. ("Round numbers" = prices that end in a "5" or a "0" and neither orders nor stop losses should ever be placed on these - it's somewhere in the manual!). I'll show the relevant chart below (Dana Petroleum) and here's the email and my response thereto (you'll note too that I discuss "news" and "leaving trades to run" so it's a very useful email - thanks Alan!):

"Hi Ian
Can you give me some guidance on a trade I've been stopped out on please.
Not sure what I did wrong, if anything.
It's Dana Petroleum. It dropped out of its counter trend channel running Dec to beginning of Jan, with a probe down on Tues 13/1/09. There was a retrace (not very strong I admit) and the probe was 'bettered', the low point being 846.5 on Fri 23/1/09. The price retraced again and was 'bettered' once more to the downside at 807 on Tues 3/2/09, where I placed a sell trade.
Since then it recovered and went on to 1043 on Mon 9th! I might add that on the 4th of Feb, Reuters carried a story of an announcement by Dana that they'd made a gas find in the North sea.
I know you're not interested in the news, but maybe this caused the turnaround and should have been a warning to dump it ASAP?
Do you ever look at a trade you've placed and decide that it's going seriously against you and cut it before the stop loss is reached? I let this one run to the bitter end unfortunately, at 967. What do you think?
Alan."

My reply was as follows:

"A clearcut case of "round numbers". A sell just above 800? Surely 799 at the very highest, & thus no fill.
Re "news" - I only ever check "news" when dealing with subscriber mentoring issues, if it seems appropriate. I never bother re my own trades, which I never "dump" unless they have been going nowhere for weeks & if at the same time I'm off on my frequent travels".

The next email "breaks my rules" a bit as regards answering, because it deals not with stocks, nor with indices, but with gold - but hey, I'm the guy with the microphone here - so I can do as I please! (But please, no emails regarding "other stuff" to me - in the main, they won't be answered - but this is here because of several similar messages recently received.)

"Hi Ian,
I wrote to you a while ago to get your opinion on the price of Gold. Can you tell me why Gold should go much lower since its only gone up since then (you mentioned a drop to around $650usd?). I just can't see why it would drop near these levels. I 'd just like to understand the fundamentals and Gold has just kept going up since I wrote back in Jan.
Sorry for my frustration but you're the only one I know who holds this view.
I want it to drop to $650 but its hard ignoring all the others (colleagues and friends) when I can't back up my argument. I subscribe to WICS mainly to get your overall comments of the markets which have been right on.
Many thanks,
Mark."

My response was:

"Mark - you're by no means alone in asking your question! The answer is simple enough however, both via the charts and via fundamentals. I agree that very few subscribe to my opinion on this - but that doesn't necessarily mean I'm out of order here....
1) per the chart, ($LBM but it doesn't matter which we choose really) - it's working its way up a longish but counter trend channel.
2) per fundamentals - a) there are about 86% gold bulls per the DSI figures, & that level of bullishness means there are fewer and fewer buyers who have not already bought, so prices cannot keep going up consistently. Yes, there could be a further run upwards in the same way as oil went crazy in the summer, but then it will fall.
b) an awful lot of those who currently hold gold, are facing ongoing margin calls on other "investments" and they will have to sell some/all of their gold to meet these calls. That process will get worse over the next few months, because if anyone is saying "the worst is over" they are living on a different planet. And of course, even those who might wish to buy gold, may not have the necessary funds to do so - a situation which can only be exacerbated as this deflationary depression gathers momentum and wipes "value" off all asset classes except cash.
Now these are only my views based on my analysis - I could well be wrong!
Ian."

In fact since I replied to Mark, the DSI figures on Friday were showing 92% "bulls" for gold! (Try Google for more re DSI - Daily Sentiment Index - if you're unfamiliar with it.)

OK - on to a couple of charts and first we'll look at the "round number" issue mentioned above, on the Dana Petroleum chart. Then we'll see how the 45 DMA seems to be a pretty good "trade manager" in Caledonia Investments - and there's a nice triangle there too - before we examine the ongoing triangle in the Nasdaq100.

And that's all for now - so all the best until 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'.