Another beautiful day in the mountains - hopefully you too are enjoying an outbreak of Spring!
What's new in the markets then? Not a great deal really - just the "same old same old" for now. As mentioned in the "WICS welcome" email I have been sending out to you newer guys & gals, there is a real battle going on between the bulls and the bears as the overall downtrend tries to establish itself in the face of strong opposition by the hopelessly optimistic - and by the crooks (or merely the typically ill - informed "financial advisers") who would have you believe that every drop is a "great buying opportunity"...Remind me please as to how these folk earn their commissions - is it by getting you to BUY, or to SELL stuff? Nothing changes, eh?

No change either re Northern Wreck - it is still a wreck. No Lordship for Sir Branson either - probably no Christmas card from Golden Brown either. That's Gordy's "Golden Rule" (never to borrow more than 40% of GDP) well and truly blown out of the water now that £110bn has been added to public sector borrowing. I note that the Lib Dem spokesman has just suggested "Now the government must work out the seriousness of the problems, with an independent audit of its (N. Rock) loan book...." My my - that was some stable door to push shut then. Maybe it's a tad late now for an audit? And with £40bn of the "best" mortgage security being held in an offshore trust - gosh, it's hard not to use a few wee swearie words. Maybe I'll restrict myself to just the one, and put it before the word "incompetence." Oh yes, and the wee glove puppet is saying "It will be better for the government to hold on to Northern Wreck till market conditions improve and its value increases." Ho Hum. A longish wait then.

Barclays announced some pretty reasonable figures during the week, with just a small increase in bad debt provision, and a 10% dividend increase to rally the ditherers - pardon the Williams cynicism, but I did enjoy the head honcho's smug remark - "The dividend increase is a sign of our confidence....we are right on top of our risks...." Is that "right on top of a heap of smelly stuff" perhaps? We'll see. And Credit Suisse has suspended some traders for "pricing errors" that caused it to need to write down the value of some investments. That's a good one!

The other thing that appealed to the Williams so - called sense of humour during the week was all the shmoozing by Messrs Cameron and Brown at the National Farmers' Union conference. All of a sudden, farmers are good guys again. Nothing to do with vote catching of course. And speaking of farmers, it seems that 6500 tonnes of beef are being "recalled" by the US government after an investigation into a meat processing facility. Most of it seemingly went into school meals and according to a spokesman "Much of it has already been consumed." I didn't realise that "recall" and "regurgitate" meant the same, but it is America after all.

Moving rapidly along, it appears that asking prices for houses in the London area are rising. You can easily ASK for more for your house of course....... and speaking about the London area, one of this year's biggest scams has to be the so - called "public consultation" regarding the third Heathrow runway. As if the public is going to have the slightest influence thereon.

Finally today, before we look at a couple of charts, the overall "bad news" regarding the US economy is slowly but surely leaking out - the New York Times reports that 8.8 million American homeowners are now in a position of negative equity. That's an awful lot of people and the USA's drop in house prices has a very long way still to go.

Anyway, just before moving on to examine a brace of charts, here's a recent email that I think is worth sharing with you, as regards the question of "trade management".

"Hi Ian,

A question about stop loss management; when the market is falling away steeply, as per most of last week, where ‘windfall’ would not be the correct term but the DMA managed stop loss is falling way behind and a significant retrace seems highly likely, would you consider changing your stop loss management during that period? For example, maintaining a constant stop loss of whatever the difference was when the sharp fall started and then wait for the DMA to catch up – provided you are not taken out by the retrace.

I can hear the words ‘fear and greed’ echoing around my mind but when one’s overall portfolio shows a threefold increase within a couple of days that promptly fizzles away within the following couple of days, one can’t help wonder whether a different SL management process should have been used to suit an exceptional market shift.

Regards,

Laurence."

My reply was:

"Laurence - I understand the point of course. Fear is the word rather than greed I suspect - totally understandable as I say. But my answer is that the methodology works. Sometimes these so - called 'unusual' situations arise and sometimes they will cause stopouts - but overall a retrace to a well managed SL area will then turn back again and give you the profits once more. The problem always is that to deviate starts a psychological process working that results in more and more excuses ('reasons') to deviate. In due course you end up with no methodology worth bothering with. (But if you have several trades pretty close to a windfall then I would not see closing them out as a 'deviation' if what you feel is 'uncertainty' or 'bewilderment' - in that kind of thinking process the best thing to do is clear everything out and stand aside for a bit)

Ian."

On to today's charts then, and given that so many of you are seeming to find potential "buy" trades hard to find (and many of you clearly still suffer from an "investor" mindset that prevents you from looking at "sells" - get over that feeling, folks - for your financial health!) we'll examine Invensys and Speedy Hire - the latter was recently discussed in WICS of 3rd February. As far as potential "sells" go, have a good read of the last couple of months' worth of WICS - and a wee note to a few of you newcomers to these ramblings - whereas I'm delighted to hear from you, and I'll help you all I can, YOU need to do some work too! Spoon feeding is NOT something you will ever get from me. The comment thankfully applies to very few of you - but if the cap fits.....

And that's your lot for this weekend - I'll speak to you again next Sunday as usual.

Ian.

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'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'.