Well, there you go then - even more proof (were it needed) that "loonies rule OK" when it comes to current market conditions. Friday produced a veritable spate of headlines suggesting that UK Plc is in just a wee bit of a mess - Savills announced that they would be cutting a whole load of jobs due to a huge reduction in business, and their chief exec suggested house prices "still have a long way to fall." HBOS announced the closing of 53 of its estate agency offices. According to Grant Thornton, UK personal indebtedness is greater than GDP, for the second year running. And the ONS says economic growth is now "at a standstill". So what did the FTSE100 do on Friday then? And have a look at the Savills chart too! Is everyone nuts? No need to answer that! And of course, all the usual suspects are bleating for an interest rate cut that would let the SEF (use the search engine if you're new to these ramblings and have not yet met the SEF) fly high again. Hmm - the USA ain't doin' that well on 2%, and Japan's problems have lasted rather a long time on somewhat less than even that low rate. Oh yes - and the same usual suspects are clamouring for a windfall tax on the energy companies. Sounds good eh? This cynical fella isn't so sure. The oil industry paid Gordon's lot about £8bn in tax last year, but this year the figure will be around £16bn due to higher price levels. Might it not be said that Gordon is already getting a bit of a windfall from these companies? Does the UK government not benefit hugely from rising oil prices? And does it pass on the dosh to the consumer? Hmmm.

Speaking about the USA, the same loony situation rules over there too of course - GM has pulled out of sponsoring the Oscars, having lost a mere $18bn so far this year, having dumped over 50000 jobs in two years, and having cut its dividend for the first time since 1922. No more Oscar ceremonies for GM then? More like a final curtain call looming! And Freddie Mac/Fannie Mae (again, if you're a newcomer, please type either of these names into the search engine) will certainly return exactly zilch to shareholders when they get taken over by whatever sorry lot get into the White House this time around. Yet "investors" across the pond believed that comments on Friday by Bernanke (Fed chairman) and Buffet (famous investor) were suggesting the worst might be over. That's because people don't listen! Neither Bernanke nor Warren Buffet actually said anything remotely encouraging as regards the bear market's stage of development. Again, people hear what they WANT to hear. IW wants to hear only "reality" and so should anyone who seeks financial independence.

Moving on, it seems only 28% of Bradford & Bingley's recent share issue was taken up. You'll know of course that it hasn't exactly been a stellar performer - and indeed you may well have personal experience of that fact because an awful lot of its members when it was still a building society, trusted it enough to accept the original shares offer. A new chief exec has arrived, on a mere £3m package. Poor chap - how will he get by? When are shareholders going to wake up for goodness' sake?

Still in the UK, it seems Marks & Sparks is planning a reduction in redundancy payments - that would suggest to this old hand that jobs are about to go there - and not just a few jobs either. I'll bet that the plan doesn't affect directors though......but it has to be said that not all directors are the same - it seems the head of Brixton (a Real Esate Investment Trust) suggested during the week that he really had "no idea where property is going" and that property businesses in general were "hard to value". He even quoted a Dylan song to describe his views (All Along the Watchtower) so he must be a sound fellow.

On mainland Europe, it's encouraging to hear from Monsieur Fillon, the unknown French prime minister, that there is "no chance" of recession coming to France. That's just what I want to hear.........desolé, Francois, but methinks you're just a tad off channel with that comment. As suggested last weekend, we're still in the "phoney war" stage of the coming deflationary depression - but it IS coming, of that we may be certain.

On to the silly stuff and it seems a memory stick with some confidential UK data, went "missing" during the week. Maybe "memory" is a problem for the person responsible? The number of things that seem to go missing from the UK's data banks certainly makes the idea of ID cards a bit suspect, that's for sure. Another thing that seems to be going missing from Blighty is copper cabling from railway tracks. I wonder why that would be? Surely people can't be stealing it? How terribly irresponsible.

And Boris is claiming that the 2012 so - called sporting event in London will be delivered "under budget". Boris - that depends on how you define "budget".

Next there's the FSA fine imposed on a few retail garages for having "mis - sold" PPI policies. (Payment Protection Insurance.) Not much is a bigger scam than PPI - the chances of qualifying for a payout are on the somewhat remote side - and I'm being kind here. Yet there are around 18 million of the things in circulation in the UK, almost all sold by banks. Indeed, "sold" is hardly an appropriate term - most were "imposed" on the basis that you didn't get the loan if you didn't buy the attendant PPI. Where are the fines being levied against the banks then? Maybe the FSA has no category for "misimposition"?

Anyway, onward to a few charts, but first an email from "Elizabeth" that I think might be well worth sharing with you, along with my reply thereto.

Morning Ian

I’m a bit foxed by this problem and hope you can enlighten me. The general question is this: there are loads of examples where the bear market rally has caused an up channel . When is the point to look for an entry for a sell ? Is it on the usual rule ie below the probe on a probe and retrace from a channel , or on the breakout of a triangle , or is it when the price gets to below the previous low before the start of the rally ?
I realize there’s no " one size fits all answer " but I’m just looking for general guidance on how to approach the situation
Two examples of the above are Rolls Royce and Persimmon. Rolls Royce has a bit of a triangle at the top of the channel. Depending on how it pans out do I look for a sell on the break of the triangle/ below the probe on a probe, retrace from the channel or below 312 at the bottom of the channel ( so below 300 because of round number) . Persimmon is a bit further on , if it does a probe , retrace , do I look for a sell below the probe or wait until it gets to 208 at the bottom ( in reality below 200)
Regards
Elizabeth

My reply was:

"General guidance" right now is simple - wait & watch. Both your examples are messing around as is normal in these times. RR may well get higher, Persimmon has little chance of that unless an Xstrata/Lonmin situation arises & that is unlikely. These are frustrating times even if you have "been there before", as I have of course. Trust me - I'm frustrated with stocks at the moment. On the other hand, get ready to see the US indices tank...

And while I think about it, here's another email, this time from "Mark":

Subject: Friday's bounce
Ian,
As a result of Friday's rally...... I have several ( too many!!) examples of probes out of channels and (big) retraces. I now am getting (too) excited about some nice wins over the coming months.When this happens do you still stick to the TTEW rules i.e No more than 12 trades?? Or because of the number of opportunities stretch the number?
Regards, Mark.

Here's my reply:

NEVER get excited. And I mean NEVER. The only time to have more than 12 trades is once a few are so far in profit per DMA management that you can consider them as 'closed' as regards finding new ones. And if you have 12 sells running you're setting yourself up to be well and truly 'hurt'. That I promise.

OK - on that cautionary note, on to some charts, and first we'll look at Carpetright, last featured in video clip 1572. Now we can see an excellent example of rolling (dynamic) resistance so it's worth a look as part of the learning process. Then we'll update Stagecoach, which we looked at in WICS of 6th July this year - now there's a channel and a probe thereof to consider anent the comments on July 6th. Next there's another look at the IBEX index - we spoke about it last weekend and now it looks like some support has developed. Finally we'll examine a channel probe and retrace on the FTSE100 (last featured in WICS on 10th August and in video clip 1589 on the 13th.)

And that's that for this weekend - the next mutterings will be on 7th September, but I'll be back in harness on the 4th as far as mentoring is concerned. "Happy trading" in the meantime - or "happy sitting on the sidelines"?

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'.