Hello again - and welcome to more of these "summer of madness" ramblings! By way of introducing today's nonsense, it was interesting to note the other day, that TUI Travel seems to have been the first company to blame swine 'flu for its failure to meet its targets. (Type "swine 'flu" into the search engine for the context.)

In fact, there have been so many weird/silly/crazy things going on these past weeks, that today I think I'll just list a few, some without any IW comment, and some with - and for starters, how about the article by a seemingly eminent economist in today's Sunday Torygraph, suggesting that the way out of recession is to print even more money? Duh. (Try typing "artery" in the search engine....)

Then there's the French economy minister suggesting that "There is no danger of deflation taking hold" - so that's all right then. Allegedly, both France and Germany are "out of recession" according to "economists" - presumably the relevant calculations were made after a good foie gras lunch in the hot sun, washed down by several litres of best Bavarian beer - and a herbal spice cigar for afters? And over in the US of A, Paul Krugman (try Google if you don't recognise the name) is telling everyone who'll listen, that America too is "out of recession". It seems the rate at which US unemployment has been rising, is slowing down. That's like saying the Titanic didn't sink quite as fast as people had thought. Talk about clutching at straws! Those of you who have been kind enough to indulge me in these jottings for some time, will know about the IW "take" on John Maynard Keynes (another one for Google if you have never heard of him - or indeed the WICS search engine if you just want a snippet or two) - but one sensible thing he did say, was that "When the facts change, I change my opinion." So when the facts that meantime are about to drive markets down in the coming collapse, change - you may be sure that IW will mention the matter in these ramblings. But for now, how can there possibly be a return to growth, other than via fudged figures - or more likely, downright crooked figures? Politicians seek nothing beyond re - election after all, and they undoubtedly bribe the talking heads to comply with their little schemes - not with anything as tacky as money of course, but with hints of "awards" as time goes on - the odd CBE here, Legion of Honour there and so on.

Speaking of "tacky" and "money" - it seems Fred Goodwin (gosh, all this name - dropping today!) is planning a return to Scotland. Fred - you may get a warm Caledonian welcome in the form of a Glasgow Kiss, which is no more than you deserve - and isn't it astonishing that not only has the UK's Financial Services Authority (FSA) totally watered down its fancy ideas to "regulate" City bonuses, but also that so far this year, said bonuses are running at just a tad shy of £8bn? That's one area where the Really Scary Granny's crystal ball has been totally wrong - a couple of years ago, the prediction here was that bonuses would pretty much disappear. It just shows that even this guy's huge cynicism wasn't big enough to cope with the uselessness of the sheep, who just rolled over and had their little tummies tickled like the nice compliant wee beasties they truly are. No wonder the wolves feed so well!

Onward to a few wee snippets that might or might not support the general IW view that we're all doomed, as per Private Fraser's words in Dad's Army - a great series, full of gentle humour - the kind I enjoy of course. Biting sarcasm was never my style, as you know...............

First then, Lloyds Bank made a £6bn profit - that's good news indeed for the UK taxpayer.......or is it? It seems that when Lloyds paid (or rather the London government paid on behalf of the aforementioned taxpayer) £zillions for the HBoS "assets" (ho ho), the actual price was £11.2bn less than the "valuation" (another ho ho) of said "assets". That "fact" means that there was "negative goodwill" created via the £11.2bn "underpayment" (yet again, ho ho) and that was ADDED to the Lloyds balance sheet. Ho ho ho. Well, if you believe that Lloyds paid £11.2bn too little for the HBoS disaster, that's up to you ( I know a good psychiatrist if you want an appointment .) And if that is indeed your belief, then yes, a profit of £6bn was made. On the other hand, how about a loss of £5.2bn? Hmm, that's a really difficult question.

Next, it seems that in the USA, house repossessions are up 32% year on year, and still rising. Over 360000 homes were taken back by lenders in July alone. You decide how that fact gels with Krugman's aforementioned pronouncement. And in the UK, John Charcol (a big mortgage broking company) says that "over 2 million" British households are in negative equity or have less than 10% equity left in their homes. Bradford & Bingley has reported a 50% year on year rise in their repossession numbers. And according to some actuaries, the companies comprising the FTSE100 have a "pensions funding shortfall of over £100bn." That's quite a lot - and British Airways alone, has pensions liabilities that add up to 503% of its current market capitalisation. Yes, you read that correctly - their pension fund is in a hole that's over five times deeper than their perceived worth as a company. In the words of my Yank brother in law - often quoted here - "go figure."

The IMF - precise as ever in its figures - has calculated that the "cost of the world financial crisis" is $11.9trn. It's great that these folks can be so accurate - but there again, what about the (very roughly) $50trn or so of toxic waste that has still to surface? Maybe they meant "$11.9trn to date"? That's what they'll say of course when they need to revise the figure sharply upwards. After all, they're never wrong.

And in the realms of really silly stuff - what about the BBC's £90000 to hire a villa in Cannes? Seemingly it was "cost effective". In what particular way, I wonder? And the same institution apparently spends £406000 a year on bottled water. That too is allegedly cost - effective. Maybe they recycle it and sell the proceeds to the House of Commons? Oh dear.

Then we have the current idea from Blighty's government (blighted government?) to build railways capable of taking trains doing 250 miles per hour, to cut down on internal air travel and reduce emissions. Vandals everywhere will be rubbing their hands in anticipation........It's hard to grasp just how silly government ministers can be.

And finally (anent "silly") some "university" near London has published a "study" proving that smiling makes people happy. Wow - I wonder how much that cost to produce? It's great that academics are so clever. Makes the rest of us look stupid.

Anyway, before we look at a chart or two, here are a couple of emails I thought might be worth sharing with you:

The first one is from "Mark" - a fairly regular correspondent in fact.

"Hi Ian - on the subject of the next big drop you have talked of for the FTSE 100. Do you still favour the March low to be broken in this move? From earlier mails it was a definite. However, from my side I remember March, and I was scared. It felt like the world was ending and every bank was unsafe. I can't envisage that kind of fear again. The banks are motoring now and we all know the Govt will bail them. My point is how could we get down to that level since there would be less fear during any subsequent drop. Surely March was the low and a higher low will be made in the Autumn. Also re a previous mail. ' Sterling will tank '. Do you have a target Cable range?

Thanks, Mark."

My response was brief - but not because I didn't rate the question, which is a very good one:

"Re "low" & "fear" etc - better get ready to envisage that kind of fear again....... A target for GBPUSD? Parity would seem pretty likely in due course."

(For those of you who don't trade forex, "GBPUSD" refers to the relationship between the US dollar and the British Pound - also known as "Cable" in the trade. "Parity" means that each would be worth the same.)

The other email today is from "Martin" - another fairly regular correspondent:

"Ian, this morning whilst listening to Radio Four I heard a financial 'expert' say: "The French and German economies are out of recession and both economies are showing strength proving that their recovery is complete" or words very close to that. I laughed and laughed, and then thought I must enjoy this amusement one more time by asking for your opinion on that! I realise this is not a trading question so shall not expect an answer as I am sure you are busy, but if you do feel up to imparting some sarcastic wit, I could really do with it! Martin"

My reply was:

"Oh, I could do the sarcastic bit OK - but it's all just too tedious at the moment. Many "experts" are going to regret their summer of madness euphoria, you may be sure of that."

Martin - hopefully today's mutterings have added a little to that brief response for you!

For sure, this "summer of madness" has left an awful lot of bears standing around feeling pretty bewildered at the very least - and it's certain that the "experts" (ie the permabulls) are going to need to get their explaining hats on and compile their "excuse list" for when things turn downwards again, as they will. It's quite possible (try "Last Lonely Eagle" as a phrase in the WICS search engine for a similar mention a while ago) that once again, IW will become the "last bear standing", having dodged all the Glasgow Kisses meted out by Mr Market and his wee slaves the sheep and the talking heads, aka sheepdogs. (If you're lost here, either you have never fully read the manual, or it's time to take it with you out to the sunlounger and do some revision...)

Anyway, on that note, on to a chart or two. First today we'll take another look at Homeserve - last featured here in video clip 2544. Now it looks like another, somewhat bigger version of these "rising wedges" has been broken. Is it too late to follow it down, or might some lower support provide another chance to get in? (You'll doubtless have noticed, both from WICS and recent video updates, that rising wedges seem to be everywhere at the moment. That's a function of overall market action of course, and perfectly normal - sometimes there are loads of triangles to be found, sometimes channels, sometimes trend changes etc etc. Don't feel that kind of thing is unusual - it's not!) Just to reinforce the point, we'll revisit a US stock - FedEx - last mentioned in video clip 2521. Might there now be a viable sell trade brewing at a much higher price than discussed back then? Finally we'll examine potentially "conflicting signals" on the chart of Pace. Does the rising wedge suggest a sell, or does the clear horizontal resistance imply a buy? Ah, decisions, decisions! What was that you said a while ago, Williams? You can buy, sell, or..........?

Anyway, on that note, happy trading till next weekend - please note however that (due to my webmaster's commitments) WICS will not be published until some time on Monday 24th - although it will be written over the weekend as usual. I'm off now to convene with my economic advisers under the walnut tree at the bottom of the garden, where the wee elves coexist peacefully with the trolls and the bears.....

All the best till the 24th.

Ian.

PS - just popped in to the kitchen to fill a glass with something, and spotted the design on the roll of kitchen towel - pink elephants having a great time in a paddling pool.......appropriate enough for these times eh? Add a bull or two and you're all the way!

'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'.