"WORLD SAVED FROM BEARS - EXCLUSIVE!" The headline today from the Weekly Blah says it all really, doesn't it?

With France, Germany and Japan already "officially" out of recession, and the good ol' US of A about to follow suit, where does that leave all these doom and gloom merchants now eh? After all, the chairman of the Federal Reserve has to be right, doesn't he? "The prospects for a return to growth in the near term, appear good" - the exact words of Mr Bernanke last Friday. Nothing more need be said then - so off you all go now with the rest of the flock and buy as many shares as you can afford, watch them all rise to the stratosphere, and enjoy your comfortable retirement, ignoring all discussion to the contrary............. or perhaps not....??

Hmmm.....it's difficult, isn't it? (NOT following everyone else, that is - especially when "everyone else" includes people like Bernanke, who "should know what he's talking about") The thing is though, Bernanke and his ilk are simply "functionaries" and they don't necessarily give voice to what they truly believe, for fear of.....oh, I dunno - fear of whatever - ridicule maybe? And they don't necessarily have towering intellects either - although surely Mr B can't really be so dumb as to actually believe his own words? On the other hand, an awful lot of people seem to buy the notion that the Fed can print money so fast that it can stave off deflation and return the economy to "growth" - despite the fact that said "growth" would be totally unsustainable by any sane measure.

Why? Because even if printing more and more money were to "succeed", all it would do, would be postpone the inevitable - it would not change the inevitable. After all, the very word "inevitable" means "impossible to avoid". And what would be impossible to avoid? Simply put - the need to repay debt. Of course, there are arguments running that suggest money will be printed so fast that hyperinflation will result, but the overall facts (at least for now) suggest otherwise - that kind of inflation would need the money actually to be spent, and all the current evidence suggests that people, and more importantly, institutions (banks, businesses in general) are SAVING money, not spending it. Sure, they're obviously buying into the stockmarkets, but they're not necessarily buying a whole lot of the products that underpin the constituent companies. In other words, they're buying the current sizzle, but not necessarily the sausage. They might be buying bank stock for example, but they're not taking out a new loan from the bank. You can see that effect when you look at what's going on at the huge "private equity" funds (like Blackstone, KKR, Permira et al) where their debt - fuelled purchases made in the boom times are going wrong every day of the week and "value" is being destroyed in huge amounts - "value" of course that never actually existed in the first place.

And the other thing of course (that seems to be forgotten) is that printing new money = adding to the overall debt burden of a country. That burden is still a burden, whether it's on your personal balance sheet, or your government's - because by now you'll probably be very aware that "government" debt is YOUR debt anyway! Governments are incredibly generous with other people's money.

However, for now at least, the feelgood factor is alive and well and "pessimism" is again totally out of fashion. (By the way, to save any of you more recent subscribers the trouble of emailing me to ask why I'm such a grumpy old pessimist, please type "pessimist" into the WICS search engine...) In fact, the other week one of you (thanks Susan - I think!) called me an "expert bear". Just remember the definition of "expert" however: an "ex" is a has - been and a "spurt" is a drip under pressure......... Anyway, the most important point (perhaps) about all the above ramblings, is that people WANT - and indeed they NEED to believe "everything is going to be fine". It's a human characteristic and nothing wrong with it. People generally don't want to believe in doom and gloom - it doesn't sit well with trying to enjoy life, and it certainly doesn't sit well with thinking about having "enough" money in retirement. So naturally enough, people "buy" the optimistic view and "deny" the other side of the argument. But that doesn't mean the other side of the coin has simply gone away, unfortunately. (And whatever you do, please don't think that I "want" markets to collapse. I would far rather they didn't - even though it's fair to say that a massive drop will bring huge opportunities for those with cash available at the bottom. There's no great pleasure in watching people lose their jobs and - too often - their houses as well. Only a really nasty person would enjoy that kind of thing - unless we're talking about Fred Goodwin or Gordon Broon of course....)

There's no need to go through all the "other side of the coin" arguments again here - they have been discussed often enough in previous issues - but always remember that it seldom ends well for the sheep. Coming from a hill farming background, sheep behaviour is not unfamiliar to me - and it's amazing how easily they can be manipulated by a skilled handler with a decent dog or two. (It's all in the TTEW manual!) It's also worth noting that the slightest thing can cause them to lie down and give up on life - I'm sure that every evening they have a wee meeting where they draw lots to decide which of them is to have the privilege of being found dead in the morning........and for sure, that wee analogy can be translated into the markets - it will take very little to have the sheep turn from "happy" to "sad" and start selling like mad as the autumn arrives. I still favour the "swine 'flu" excuse as the starting - off point, but we'll see!

Talking about "need" and "want" above - do YOU "need" to trade? When you open your computer every morning, does your trading finger begin to twitch? Do you jump in to trades with little thought? It seems to me from reading some of your recent emails, that you're almost desperate to open trades......if that sounds familiar to you, your homework for today/tomorrow/the next day is to type "patience" into the search engine and take it from there. You should WANT to trade - obviously. If you don't want to trade, what the heck are you wasting your time here for? It's also true in one sense that you might NEED to trade. I needed to trade, for goodness' sake! The family had to be fed and they don't enjoy salt herring and oatmeal either - philistines that they are. But if the "need to" takes the form of "addicted to" then you won't last long in the markets, that's for sure. Take control of your trading finger!

And one other thing while I'm in "preaching mode" - if you see a chart that's telling you something fairly clearly, then listen to it! If it's saying "I look like I'm going to head upwards for a while" then even if your overall belief is that "markets are heading down", THAT particular stock may not share your belief. And the other important point to note, is that timescales/timing need to be considered. Just because the IW view is that "markets will indeed be heading down" doesn't mean that profits can't be made to the upside. Markets rarely go up and down in straight lines after all! (If you re - read the comments written below the DAX chart in WICS of 19th April this year, you'll note the prediction for "several up months", not to mention the comment about the Dow Jones Index on March 29th this year - and if you have been suffering these ramblings for a while, you may also remember that the real IW motive in constantly predicting the next big fall is to try to get you thinking carefully before "investing" your hard earned dosh in anything meantime. Don't confuse investing with trading!)

Anyway, all the foregoing is just by way of answering a load of different emails received recently, and I hope it may have helped a little.

Moving on to a few "snippets" then, just to lighten things up a little - and first we see that in the latest UK exam results, "girls have done considerably better than boys" - again! It's amazing that this seems to surprise the pundits every year. Why do girls do better at exams than boys, and is there a lesson there for traders? Oh yes! (Give it some thought between now and next weekend - but please don't email me about it. I'll mention the matter again next time.)

Next, Wee Allie the UK chancellor is telling everyone that he's going to get the G20 to "discuss bankers' pay". Gosh, they'll all be shaking in their shoes..........

Still in the UK, Tesco is planning to "build a bank from scratch, untainted by the bonus culture". Ho ho. If it's like their "untainted by chemicals" food or their "untainted by child labour" clothing, it will be a cracker.

The Chelsea Building Society has uncovered a £41m "buy to let" loan fraud, seemingly due to "artificial inflation of property valuations by third party professionals." Gosh - do you mean that some surveyors and solicitors are less than honest? Surely that can't be true! And it seems the Serious Fraud Office is "investigating buy to let frauds all over the country" so there's a lot more nasty stuff still to surface for sure. And the ex head honcho of Porsche is being investigated for alleged "stock market irregularities" anent the ups and downs of VW shares these past couple of years....will justice be done? Don't hold your breath.

In Italy, banks may start taking ham as collateral, to add to the wine and cheese they already store. Anyone for a party in the vaults? (Although there again, bankers are involved, so the "p***up in breweries" scenario springs inevitably to mind....)

Still in the UK, a Tory MP is demanding that MPs' salaries be doubled, because they're "worth it". Listen, sir - if you were to be paid what you're worth, you would be owing the nation a fortune!

And Wee Allie's tax revenues have dropped by 20%, year on year, with the "public sector borrowing rate" (PSBR) running at £8bn for July - a mere sixteen times the expected figure.....but onwards and upwards goes the FTSE....baa, baa... The total predicted deficit for 2009 is around £200bn. Chickenfeed. Or is that sheep feed maybe? Another baa baa is called for.

Over in the USA - and despite Bernanke's confident predictions - Colonial Bank has just failed - the sixth biggest such failure so far. And there will be more! Oh - and Readers' Digest has filed for Chapter 11 bankruptcy protection. What will people do now when they visit the loo, eh?

And the World Gold Council (WGC) is saying that demand for the yellow stuff fell 9% during the second quarter of 2009, with jewellery experiencing a 22% drop. But gold bugs still reckon it's heading for at least $3000 an ounce. One day maybe - but not for a good while yet.

Anyway, no emails to share this weekend, so onward to a chart or two, starting with Stobart, just by way of reiterating some of the comments made today. Is there an upwards - pointing triangle and some horizontal resistance? Then there's a look at a trendline and a rising wedge on the Dana Petroleum chart before finally we'll examine the "bigger picture" on the chart of the Dow Jones (DJIA) index, last featured here on March 29th this year and in video clip 2612 on July 26th.

That's your lot for today then - I'll speak to you again next weekend as usual - it's time now to head down to the bottom field and a spot of sheepdog training - heel, Spot.......

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'.