Hello again, and welcome to this bear market rally/suckers' rally/dead cat bounce! Since I abhor cruelty to poor wee undeserving beasties, I prefer the term "suckers' rally" because that's the most accurate description anyway, as numpties everywhere get sucked in to the idea that everything has become "too cheap" and is therefore a "raging buy". What's the reason for this rally? As suggested above, a perception that things became too cheap and that the fall was overstretched - plus an idea maybe, that the falling oil price will see faltering economies avoid recession. (And I'll touch below on a "technical" reason too.) But who knows what people actually think? Certainly the world WANTS to believe that the worst of the credit crunch is behind us - and there's nothing wrong with WANTING to believe in "good things" - that's for sure. Pessimists are just so darn pessimistic after all! But the trouble is that people allow their "wishes" to become their "firm beliefs" and they fail to separate what they would LIKE to happen, from an objective assessment of the probabilities as to what is LIKELY to happen. You just need to read some of the reaction to Citigroup's dreadful figures - their latest admission turned out to be less bad than markets had anticipated, and the perception thus has become that "the worst of the banking crisis is over". Listen, Citigroup has written off - ie totally lost - $50bn in a year. How bad is that? Fifty thousand million US dollars - which are still worth a wee bit more than their Zimbabwean namesakes (for now). That's ONE bank. And you think the worst is over in that sector?

Above, I mentioned a "technical reason" being behind the USA part of the rally during the second part of the week - the Fed, in its infinite wisdom, slapped a ban on "naked short selling" within certain areas of the market - to wit, banking and mortgage companies. I wonder why they did that? - he asked, somewhat tongue in cheek. ("Naked shorts" - sounds 'orrible really - conjures up images of....oh, you really don't want to know... are positions where traders have borrowed [say] bank stock from an institution such as a pension fund. They then sell the borrowed stock with a view to buying it back cheaper in due course and handing it back to the pension fund, which charges them a hefty amount of interest on the deal.) Anyway, across the pond, the sudden ban thereon meant that a whole lot of big short sellers had to "cover their positions" - ie buy back the stock they had sold without having owned the stuff in the first place. And that of course drove prices sharply upwards - as indeed did some options expiry dates having been reached as well. And the sudden rise in the US indices caused the whole world and his brother to jump on board in case they were about to miss the bottom of the market. Seldom has this rather grizzly bear of a trader seen such a classic suckers' rally! And lest you think that remark suggests IW is eternally bearish and (by definition) gloomy - well, you just don't know me very well!

So where will things go next? Onwards and upwards? A few hedge fund managers have been suggesting that the bottom is "near enough" and that buying stocks now makes perfect sense, even if prices fall back a bit first. After all, you buy "for the long term", don't you? So if you pick up a load of shares right now, even if they fall a bit further first, they'll do just fine over the coming years. Better still, why not buy into the hedge fund whose manager is touting that notion? Did I ever mention the experience levels of your average fund manager? You always need to remember their role in life - they are essentially salespeople. Does that keep their thinking objective? Indeed, are they capable of rational thought in the first place? Answers on a postcard please....

Anyway, the term is "sucker" and that sums things up. The less gullible are sitting quite happily with their cash in the bank, earning very little - even losing a little in real terms as inflation (temporarily) eats up more than the interest - but not about to lose their shirts either. And the savvy trader who might well have been stopped out of a number of sell trades, is watching for the opportunity to sell once again. (In fact, quite a few of us, myself included, have seen some sells stopped out these past couple of days - one of the reasons why TTEW suggests you shouldn't ever have too much open in the same direction at any time!) Anyway, what to do next if some of your sells have been stopped out? Given the Williams view that markets still have a long way (a very long way!) still to fall, why not just sell again right now? Well, you COULD do that of course, but would that mean you're sticking to some kind of methodology? Hmm....more answers on a postcard please! Nonetheless, some potential sell trades might well be viable at a higher price than below the recent lows - IF the TTEW methodology suggests such a possibility. (That's if you use the TTEW 'way' of course - you're certainly not obliged to do so!) In fact, we'll take a look at Bellway below for just that reason - it was also featured in this weekend's video updates - it's one of many of course that have bounced sharply and I'm featuring it because so many of you emailed me about it at the end of the week. The whole housing - related sector certainly jumped - maybe IW - being interested in property investment - has missed his chance to "buy one, get one free" from Persimmon or one of the other distressed UK housebuilders? Nah - this fella is more than happy to sit tight for another few years in that regard. And carpets will be cheap enough to buy too in a year or two ......if you can find a company selling 'em that's still solvent enough to be able to deliver of course...

Anyway, onward to Golden Brown and his somewhat tarnished "golden rule" - allegedly soon to be broken. I say "allegedly" because of course it has already had a coach and horses driven through it via the Northern Wreck bailout. But apparently that £25bn doesn't count, because it's "temporary." Oh pu - leeze. Do me a favour. UK public sector net debt is now the highest in Europe. So much for old Prudence himself eh! (Type the word "sclerotic" into the WICS search engine for a specific reference to Gordon's utter uselessness as a money manager. And never forget his sale of rather a lot of UK Plc's gold reserves......it was amusing to hear the shadow chancellor say during the week that "It's the end of the Brown era of prudence." George - there never WAS a "Brown era of prudence"! That's precisely why the cupboard is totally bare and the only thing possible now, is even more borrowing - which one day will need to be repaid. By whom I wonder? Not the UK taxpayer, surely? All that will happen will be an even bigger fall in the value of sterling. Anyway, enough of you folks voted him in, didn't you? Oops - not to his current office, you didn't! It would be fair to say that IW is in no way vindictive - never worth the effort - but it certainly pleases me to watch as that arrogant fool gets his comeuppance! It's just a huge shame that he didn't practise the prudence he was so fond of preaching - otherwise the UK would indeed be better placed than many, to weather the coming hurricane.

Moving along - you'll have noted of course that Alliance & Leicester found a last minute saviour in Santander Bank, who seem to be buying the mess for £1.3bn - a big consolation to everyone who paid around £9 a share ten years ago, or £12 in 2006......but even the current £3.30 or so is a whole lot more than it will prove to be worth methinks. An awful lot of jobs are going to go there, sadly - as with most of the banking sector. And the HBOS rights issue was taken up by around three people, who each spent about a tenner - a complete flop that leaves the underwriters holding a rather large baby - such a shame for them....not. And shareholders "approved" the B&B rights issue - all half dozen who bothered attending the meeting, that is.

Next, the Council for Mortgage Lenders wants "more money for banks" so that more mortgages will become available. Dream on - if more money IS made available (and it almost certainly will be, by panicking politicians) the banks will just hang on to it. Nobody yet seems to grasp the concept that banks meantime don't WANT to lend. What they want to do, is try to survive the next bout of credit-crunchitis that's looming, by rebuilding their balance sheets any way they can.

Moving on, it seems Ryanair is going to cut some winter flights, just as BA is doing. Mr O'Leary, that doyen of diplomacy, is blaming BAA and the Civil Aviation authority because of "expensive airports". That'll be why he's ceasing to use a Polish airport too then... Methinks a whole lot of the budget airline routes will just cease to operate altogether quite soon.

Anyway, some factoids that caught the Williams eye during the week - as you'll already know of course, about 87% of all EU surveillance cameras are located in the UK - one of the many reasons why IW simply refuses to live there. But an even more horrifying figure has surfaced anent our cousins across the pond. Seemingly the USA has 5% of the world's population, but 24% of the world's prison population (according to the OECD). The Land of the Free indeed. And with the FBI investigating "possible fraud" at IndyMac bank (its collapse was mentioned in these ramblings last weekend) in respect of NINJA mortgages, we can hardly expect that prison statistic to drop any time soon - plenty jobs available as warders then? For sure, as the blame game (type the phrase into the search engine if you can be bothered) gathers pace, a lot of legal eagle services are going to be needed - nae recession likely in that sector of the economy! Oh yes, and a big Spanish holiday home developer has just gone bust, but reassures investors that "nobody is going to lose any money." Would that perhaps read better as "Nobody who set the business up is going to lose any money, but tough luck on the rest of you"? We'll see.

As regards scams this week, the biggest by far of course is the "golden rule" mentioned above - and the government's reaction to its own Ombudslady's report into the Equitable Life mess, can certainly come under the same heading. She (the Ombudslady) suggests that "the government" will need to find around £4.5bn in compensation payments to policyholders. Madam, these are fine words and your report is undoubtedly accurate - if a tad too kind to the crooks that ran that particular con job - but if you think that Wee Allie and his big Boss Broon are going to shell out, you're going to have a very, very long wait ahead of you! The other small item that caught the IW eye was the wee sleekit beastie (apologies to Rabbie Burns) known as the mouse - seemingly the techies are saying it will be extinct within five years....the computer version that is. Not a chance! Trust techies to come up with fancy ideas about fifty years ahead of their time - if indeed that 'time' ever arrives anyway. Touch pads? Hah! They'll be telling me next that car starting handles are about to become redundant...

And finally before a chart or two, another report that amused this (very easy to amuse) fella came from the pages of Science Magazine. Seemingly a team of scientists has been investigating the origins of vocalisation in animals (400 million years ago - impressive!) and one of the main sources of data comes from the humble bullfrog. Why am I mentioning this? Simply because the guy in charge of the research is called Professor Bass....oh well, please yourselves.

Onward then to a chart or two before strimmer duty drags me away from the office - not a favourite IW pastime, it has to be said, but son decided to go backpacking with his girlfriend for a week, coincidental upon our (part time) gardener's holidays - hmm - would the fact that he too detests the strimmer, have anything to do with his timing? Oh well, doubtless a wee glass of something chilled will revive me!

The first chart is that of Bellway, as mentioned above in the text. Is there a counter trend channel in the offing? Then we'll look in the same general sector at my old favourite, British Land - it had a bit of a bounce too, but not a lot when you look at what other companies did last week. Is there a valid sell somewhere below 600? Then we'll take another wee look at another favourite, Aggreko, just to show that (maybe) there are potential buys still around. And finally there's a chart of the Dow Jones, to help put things across the pond in a bit of perspective. Never forget the old saying: "When the USA sneezes, the rest of the world catches a cold." Ah...ah...ahCHOO!

And finally, don't forget that the password for WICS and the video updates changes tomorrow (Monday). If you're still entitled to access, you will by now have received my email with the new password. If your foc subscription has expired, you'll have received details on how to continue. If you have received neither email, then either my admin is at fault (possible!) or more likely, your junk filter contains the message. Also, the usual suspects (AOL in particular) have bounced back a few of my messages so these won't even be in your junk mail. If that applies to you, please have a look on my website at the wise words put there by my webmaster about such things. I can't be responsible for non delivery of your mail!

Anyway, if you plan to continue to suffer these ramblings, thank you - and if not, I wish you well in your trading whatever. You'll be more than welcome to "come back" any time that you wish.

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'.