Well, as expected, the major European indices took a bit of a tumble at the end of the week - the USA of course just kept on rising, but it's pretty likely the American indices will experience their own retrace this week - both Europe and the Yanks will then continue to head on up for a wee while longer I reckon. After that, it will be a very bumpy ride back down to the ground floor or even the basement, as far as I can see!

The 'change' to which I sometimes refer, is steadily working away, with USA housing in a parlous state, and UK redundancies well up in the three months to September, to 141000. I note that UK manufacturing now employs fewer people than when records began in 1841 - obviously the Luddites among us can explain that away easily enough, but nonetheless it's a fact that the UK no longer 'adds value' in its economic activity, in any real sense.

I note that the 'Consumer Price Index' (CPI) is running at 'only' 2.4% a year at the moment (The average for the EU is 1.9%) and that the 'Retail Price Index' (RPI) is currently at 3.7% - it's the 'real' measure of inflation of course, although Gordon and his equally crooked chums at the Treasury naturally use the lower figure in their ridiculous claims that all is well in the world thanks to 'years of purrroodence' from a brilliant Chancellor. It strikes me that if you remove one or two letters from that title, you can pretty easily arrive at the word 'Chancer'.....

Speaking of chancers, I note that the spread bet companies are trying to make the use of 'screen' ('market' or 'cash') prices very difficult for us, by no longer permitting stops to be 'screen based'. In other words, you now need to accept 'their quote' before you can open a trade or move a stop loss, often making it impossible to move a SL to where you want. They inform me that their reason is because the Inland Revenue is unhappy with the use of cash (market) based trades, on the basis that "The use of cash market pricing is too close to being 'investing' rather than 'betting', and thus may attract Capital Gains Tax etc etc blah blah...." Now I'm going to keep my true thoughts on this excuse to myself (for once!), but nonetheless I might suggest that I don't for one moment accept their 'reason'. So what to do about it? Well, it certainly makes our job that bit harder, and it's a bit of an extra licence for the spread bet providers to print money, so make them work for it! Phone them every time you're seeking to place an order, or to move a stop loss - even if you use an internet platform. Get them used to being badgered for 'cash' prices. Ask them for the cash price there and then, and of course they will also give you their current spread price. As an example, let's say you want to move a SL on a buy trade, from 289 cash basis (ie screen price) to 294 cash basis. Ask for the current cash price - let's say they tell you it's 311. (They WON'T tell you this UNLESS you ask for it). Their spread is currently 309/313, so therefore right now there's a two point differential between the cash and the quote, both to buy and to sell. (It's not always the same differential on both sides, by the way - but let's keep this as simple as we can!) All you can then do - and this is not satisfactory at all in my view - is try to place your new SL two points away from the cash price, to reflect the current spread - ie 292 'their quote' in the above example. Now given that they can alter their quotes at any time to suit themselves, my suggestion above is a very blunt instrument indeed, and certainly you ought (for the moment) to trade a bit 'lighter' per point and keep your SLs wider than you could when using market - based prices. I'm sorry that's a 'woolly' suggestion but I see little alternative till the companies concerned come to their senses and sort this matter out - if you need to use spread betting in the first place due to financial constraints regarding your budget. If you can perhaps afford a bigger trading bank, then you might consider a move away from spread betting for the moment, and use CFDs instead. (Contracts for Difference). Yes, these are taxable instruments, but the spreads are tiny and there is no 'rollover cost' if a trade remains open a longish time. Most spread bet companies have a broker division that provides CFDs, and they'll happily explain them to you - please don't ask me for further explanation because that kind of simple research has to be up to you to do for yourself. Nonetheless, I suspect the problem will go away of its own accord in due course, so as mentioned above, at worst all you need do for now, is trade less per point in the first place, and keep your stop losses a bit wider. One final suggestion (if you have the time to watch your trades fairly closely) is to have a wide SL as a 'fallback safety net' but in fact also to have a 'mental' (screen based) stop loss of your own, and if you see THAT price being breached in the cash market, dump the trade yourself, BEFORE your 'quote based' SL is triggered. To conclude, I'm sorry this is so woolly but I can do nothing about that I'm afraid.

Moving along, I see that GM, Ford and Chrysler have been having 'crisis talks' with George W. Maybe the boot should be on the other foot - Georgie needs all the help he can get - how about a big fast car supplied gratis, to help him escape? I doubt if many would bother to hold him back. But seriously, the 'Big Three' (US car makers) are whingeing that all their troubles are caused by the White House not having 'encouraged' the Japanese to allow the Yen to rise in value against the dollar. Hmm, so the fact that they build monster gas guzzlers with rubbish handling, that fewer and fewer people want to buy, has nothing to do with their impending Chapter 11 applications? ('Protection from creditors' if you have never heard of Chapter 11. Or 'bust' would also describe it.)

It was interesting to note during the week that one of the FSA (Financial Services Authority) head honchos gave a speech to bankers, in which he suggested "The clouds are darkening" and that banks should be planning ahead to cater for rising unemployment and much higher personal debt levels, giving thought also to what effect a 40% fall in house prices might have on their overall liquidity. He was at pains to emphasise that he didn't mean there WOULD be a 40% drop in house prices - but for all that, it was a very clear warning shot across the bows for the banking industry. A recession? OF COURSE there's going to be a recession!

OK - that will do for this weekend - on to some charts, and today we'll revisit Admiral (last mentioned on 29th October) to see how the trade has finally come to an end for some of us - some are still 'in' it depending on their SL position of course - whether they end up with more, or less, profit, will depend on events as always - but I don't think anyone should be complaining either!

The chart of SThree is an update from 22nd October, and that's your lot for this weekend - I'll talk to you next weekend, then I'll be away the following one (2nd/3rd December) en route to the mountains again for the winter. (In fact, I'll be out of touch between 29th November and 8th December as far as emails are concerned.)

Happy trading,

Ian.

PS: have a look at the chart of Evolution Group - might a 'sell' be brewing? Oh yes, and there seems to be a bit of a pattern change on the chart of Northern Foods - worth a little research methinks.

PPS: Some of you who had been wanting to gain access to my CD Rom 'Trade & Raid' seminar and its ongoing weekly video updates I know have been a tad frustrated by the limit I had placed on the subscriber numbers - those concerned will now have been contacted by my publishers to offer them a place now that I've established I can accommodate a few more people without harming current subscribers. Some of those on the waiting list inevitably have 'fallen by the wayside' by now of course, so if any of you would like to take advantage of the likely vacancies, please contact my publishers on 01709 820033 to check current availability. I'm not heavily into 'promotion' of my own material but judging by the very happy emails I receive from current subscribers, many of them are making a great deal of money directly from the knowledge they have acquired through 'Trade & Raid'. Perhaps you too can join them!

'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'.