Gosh, doesn't time fly? Here we are almost at the festives again and still the markets whose collapse has been predicted here so often that if you look for references thereto in the search engine, you'll melt it down, are holding up remarkably well. Ah well, the day will come when the dire Williams warnings WILL come true - but the timing is still uncertain. Why has the old crystal ball proved so unreliable as regards the "Big Picture"? Simple - I totally underestimated the degree to which central banks/governments would attempt to continue propping up the markets by expanding credit availability to utterly crazy levels. The problem of course is that no politician (while currently in power) wants the eventual meltdown to happen on his or her watch, and the effect will be that the train wreck in due course will be far, far worse than it might otherwise have been. An excellent example in the UK is the ongoing propping up of Northern Rock against all common sense and logic - sure, its bankruptcy could result in big job losses but the reality is that many of the jobs are going to be lost anyway - despite the pay rise and festive bonuses being paid to the staff. At least Adam has been given his marching orders "two months early" according to the media. That would be "several years too late" then. I realise it sounds harsh to say "let things fail" but when do you ever hear of the small engineering company (or whatever) with say 30 employees, being bailed out by government if it turns out it is about to go bust? Especially if its business model had been founded on shifting sands (or perhaps in the case of Northern Crock, "shifty" rather than "shifting"......) And with it turning out that not only is Sir Branson struggling to raise the loot to take it over, but he doesn't even have a banking licence, you have to question just how much "due diligence" has been conducted.

You'll have read of course about some of the central banks (UK, USA, Canada & others) all getting together during the week to provide around $110bn that will be available to "inject" (their term) into struggling banks - ie to provide some extra liquidity to those banks that are finding their erstwhile sources of borrowing a tad unwilling to lend. When the announcement was made, stockmarkets rose - then fell sharply as people began to realise "Oops - maybe this toxic waste problem is a lot worse than is being admitted, if these central banks felt the need for co-ordinated action".

The thing is that the problem amounts to TRILLIONS, not mere billions of dollars, and there is no chance whatever of its being solved by injecting more liquidity - but no serving politician is going to admit that, even if they actually know anything about it - which is doubtful anyway. And retail banks are certainly not going to admit to being technically insolvent, even though many are in that position. On USA bank balance sheets there are "assets" termed "Level Three Assets" - what are these worth? The answer is "whatever value the bank decides to give them." Hmm - you work it out! There will be tears before bedtime, that is certain - and if this latest central bank group hug fails, then that's the end for them too. Scary stuff - I love it!

Moving along, it seems the UK is to have 7000 offshore wind turbines. It was amusing to note the words of a Tory MP who was speaking in support of the plan: "We are an island nation - there's a lot of wind around. It's a good thing there will be more offshore wind......" Build a great big turbine above the House of Commons, guys - that will do the trick. Meanwhile, that paragon of environmentalism, Shell, quietly sells off its "alternative energy" interests.

And I see that McDonalds, not content with current UK profit margins, is franchising its car parking. 45 minutes to eat your Big Mac in the car park, then it's a £110 fine for overstaying your welcome. That would be 30 seconds to establish it ain't worth eating, and the rest of the time trying to digest the bite you took.....only joking guys - I've never even been in a McDo, honest - I'm only going on hearsay.

Anyway, before we look at a couple of charts (last ones for 2007 by the way) can I just mention the matter of "pessimism" versus "optimism"? You might be forgiven for imagining that I'm a pessimist, given the comments above. PLEASE don't think that. Focus on "logic" in this business. All too often, the idea of "pessimism" is associated with "selling" and "optimism" with "buying". WHY? I'm always optimistic about my trades, in whichever direction they might have been opened - and so should you be! What's the point in opening a trade on the basis of "Oh, it won't work anyway"...? I recall mentioning some time ago that my late Mother's mantra was "you know, we're not a lucky family" - said every time she asked my wife to buy her a lottery ticket when we still lived in the UK. And IF (when? - I wish!) central banks fail, and the world monetary system has to change (back to the gold standard - who knows?) it will be interesting and exciting - pessimism has no place here! Maybe that's a bit of a "festive season message" for everyone? Not really - I wouldn't be that arrogant!

OK - let's look today at a couple of charts - M P Evans is showing a nice "upward facing triangle" (Thanks Laurie for the heads - up) while Enterprise Inns is doing the exact opposite, and British Energy Group is doing neither one thing nor the other - but as a "defensive stock" it might possibly strengthen over the coming months.

That's your lot then for 2007 - your festive season homework will be to revisit WICS of 7th November 2004 - and I'll see you again on January 6th. With every best wish for the festive break, and here's to a happy, peaceful and prosperous 2008.

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'.