A slight change to the Northern Wreck song's first line then (if you're new to this nonsense, please have a read of the last few weekends' worth to get the context) : "How high were YOUR shares when you sold 'em, Adam?" The whole mess is totally out of control of course, but at least Mr A. and some of his buddies have been given their marching orders at long last. Poor soul, when he gets his pension at 55, it's only going to amount to around £300k a year. The mad scrabble now is to protect jobs, and given the specific politics involved, that is hardly surprising - but from this standpoint I doubt very much if too many jobs will be saved. The business is insolvent and its model is (and was from the moment the directors decided to be clever) unsustainable. If anyone imagines Sir Branson et al don't know that, they are kidding themselves - because HE is clever! I recall mentioning something about 'vultures' and 'carcass' - use the WICS search engine - and that's certainly the way it looks now, prospective 'nationalisation' or not. Anyway, we'll see.

Banks in general obviously learned a fair bit about 'bad news management' from (ex) el presidente Tony - they have been quietly leaking toxic waste information into the markets rather than risking being honest - mind you, most banks have had centuries of practice at being totally dishonest so there should be no surprise about that. Barclays finally admitted to a £1.3bn writedown the other day in respect of toxic waste exposure - and in a little 'aside' they mentioned that there "could be some ongoing exposure".....Oh yes. HSBC too played pretty much the same game - and this whole credit crunch business has only just begun, from the Williams point of view. The Fed very quietly pumped another $47bn into troubled US banks during the week, with barely a murmur - and it's not only banks over there that are exposed - ETrade (a huge brokerage) has just seen its share price tank on the admission that it too has CDO (ie toxic waste) exposure.

Continuing on the theme of scams (another word to type into the search engine perhaps? - in the singular) it seems the Olympics one is in full swing, with its so - called Delivery Authority trying to claim to the Select Committee that "Costs have not risen in real terms since bids were submitted in 2004...." The loonies are well in truly in charge of that particular asylum.

And of course the usual inflation scam is on the go, with the government's favourite CPI (Consumer Price Index) coming in at 2.1%, the RPI (Retail Price Index) at 4.2%, and the Telegraph's attempt at 7.2%. For sure, it ain't 2.1%, whatever else it might be!

Moving along, it seems Nationwide is bang up to speed with what's going on in its own marketplace - "The UK housing market is set for a slowdown...." They surely have an even slower connection to the outside world than I'm meantime suffering.

Oh yes, and some politician has come up with a great idea to build "affordable housing" in Cornwall (which is hugely necessary, by the way.) He reckons communities should be able to bypass the councils and decide what to build, and where, for themselves. OK so far - but then the punchline - "No - one will be able to make a fast buck from the scheme." Hmm - that's another good theory down the drain then.

Next, before we take a look at some charts, I thought it might be worthwhile to include another couple of emails from you, because they might be of some general interest. (I have 'topped and tailed' the first one, just to make it more readable than the original hurried attempt - so it's not exactly as you received it, Tom!)

Subject: Re: Worldwide deflationary recession

"Tom - good points - see below re my response.

Ian."

Hi Ian,

I was intrigued by your comment in WICS last weekend about the impact on India and China, and $50 oil & $450 gold.
Could you expand a little? I don't really understand the basis for this prediction.
I can see strong arguments supporting the oil and gold prices for a considerable time to come, and find it hard to see what's going to trigger such a major correction.

>>> the imminent (and huge) lack of liquid cash, basically. The recent credit crunch is only the tip of the iceberg. Gold pays no interest, & costs money to store safely. Only the vast 'easy money' expansion of the past few years has pushed it up, just as it has done everything, from stocks to art, not to mention property, where we're seeing the start of the crash. Gold especially has a hugely bullish following among the 'stupid money' that guarantees it will fall a long way. The 'smart money' (commercial hedging) has more short positions open than ever before. Oil will suffer from falling demand, again due to lack of money. It's nowhere near as scarce as is made out either, in relation to coming technologies. (there's a great early 19th Century analogy: a newspaper headline that says "World to go dark - whale oil running out....")

India & China are hugely reliant on exports to the USA. That market is about to collapse - currently the Yanks account for 20% of the entire world's consumer spending. Not only that, but politically China is fundamentally 'immature' & the coming drop in living standards among the growing middle classes will create big disruption and set it back a very long way. India might be a democracy but it has massive infrastructure problems to overcome and the coming crash won't help it much with those.

Maybe my ignorance of economics - do you have any sources or reading you could suggest to understand this better?

>>> The Economist is pretty good but it's hard to get away from media interests wherever you look.

Re 'smart money' mentioned above, try
www.cftc.gov/marketreports/commitmentsoftraders/index.htm

I can see possible recession coming to the US and maybe Europe, but why deflationary?

>>> nae money, as above, = deflation. Think 'Japan, these past nearly 20 years.'

It's hard to see demand for oil falling much and supply is surely very limited, and increasingly so.
While isn't gold likely to be in demand as countries diversify out of the dollar?

>>> as above, gold is hard to store & pays no interest. Diversification out of the dollar is already very much the case - the euro is rapidly taking over. Oil supplies are much less limited than people imagine - that's a fire the media just loves to stoke. What IS limited, is refinery capacity, but that is being dealt with, albeit it will take 3 - 5 years for new ones to come on stream.

The next email is very much relevant to today's chart discussion:

"Hi Ian - stopped out yesterday on Euromoney Institutional Investor after the results announcement – that’s the way it goes! In a recent e-mail you said that you always ignore such announcements when considering taking a trade. I entered this trade on 9th Oct and I wondered if you thought that this was actually a bit too close given the uncertainty of the announcement contents? Do you think that I should bear this kind of thing in mind in future or do you think that this is a novice’s lack of experience talking?

Thanks for your time, M."

My reply was:

"M - on a 45 dma you would still be in the trade.....we'll see how it all pans out, but generally it's rare enough for 'results' to cause any real hassle because buying thereon (or selling) against the prior trend, tends to be a knee jerk reaction & the trend resumes. That said, sometimes it doesn't work like that of course - it's a matter of what will "probably" happen that matters to me though."

On that note, let's examine a chart or two, starting with Euromoney as above. Then we'll have a look at Capital & Regional, for two reasons - first of all to look at how areas of support and resistance can affect subsequent price action, and secondly to let you see how a chosen dma relates to these. (Oh - and thirdly - how you might have said when it hit £12 and bounced back up that it "can't go any lower so I won't risk trading it even though the signs are there.....")

And given that some of you have suggested you're suffering from 'information overload', that's all for this weekend - so all the best until the next time, which I very much hope is going to be the final issue of WICS written under the burden of an internet connection provided by an overpriced phone 'service' that seems to be run by a number of pretty incompetent carrier pigeons, one with a broken wing from a fight in the pub, one that's so obese from too many McDonalds visits that it can't take off, and a conscientious one that's exhausted from trying to cover for the other two......anyway, I'm glad to have got that little rant out of the way, and we'll speak next weekend as usual.

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'.