Interesting that despite my having 'dropped a hint' last weekend about 'M&A activity spilling over into a certain sector' I have received no emails regarding the changing volume and price pattern in the likes of MFI, DFS and so on.

I'm sure that's simply because you are just happily getting on with things and need little input from myself!

Anyway, on to the 'meat' of today's offering, and I note that my mention last weekend of 'Big Oil muscling in to the alternative energy sector' was somewhat well timed, with Shell looking like it might be taking over Vestas, a Danish wind energy company.

All they really need to do is find a way to harness the hot air emanating from the world's politicians and that would be the problem solved.

I see the chairman of Barclaycard, his company having just allowed £1.57bn as provision for bad debt, has suggested that "I think it's too early to call the turn in the credit cycle for UK cards and loans" - an admission of course that he indeed believes 'downhill' is now the direction. I don't imagine that 'first to the bottom' in that particular event gets the Gold medal though.

'M&A' frenzy of course continues to spread like bird flu - Britain, Germany, Luxembourg, Spain, and now Italy, with Enel (huge energy company) seeking to bid for Suez (huge French energy company that already owns a fair amount of UK Plc). 'Adding shareholder value' eh? Where have I heard that before?

Anyway, doubtless it will all keep the European markets in their current frothy state for a few weeks longer and I'm still pretty confident that the FTSE100, for example, could have a serious attack on 6000 before the real collapse begins.

I note (from my USA relative) that a survey in the USA of 'non professional' traders has just come out with the statistic that over 85% of them are bullish - you'll understand from previous WICS ramblings that in my view, that means Joe Public is buying like there's a shortage, and that means that pretty soon, there's going to be nobody left who hasn't already bought - and THAT means the smart money will be out of the market having sold to the 'not so smart money'.....and THAT means.....

Just let me reiterate something that I have frequently touched upon both in WICS and in individual mentoring emails - I am NOT 'pessimistic' - nor indeed am I 'optimistic' when it comes to the matter of trading - I can't recall who said the following in a publication so my apologies for the plagiarism - "The markets will do what the markets will do."

If you take the emotions of pessimism and optimism into the trading arena, they will inevitably colour your judgement and they have no more place in that environment than do anger, greed, fear and so on.

If I see a chart formation that interests me, I care not a jot whether it looks like a 'buy' or a 'sell' - why should I? Profits are made in either direction, after all.

Yes, at the moment in the midst of this final part of the long term bear market rally, most charts are tending to show buying opportunities rather than selling ones, but if you look hard enough you'll also be able to see some potential 'sells' developing. In the same way, once the bear market resumes in earnest, not all charts will be indicating 'sell' trades - plenty buying opportunities will still present themselves, especially in some of the sectors I touched upon in last weekend's very basic 'economics essay'.

Speaking of 'emotions' above, I received an email from someone during the week who had heard of TTEW and was thinking of buying the manual - essentially, he was asking how soon he could expect to make a decent living from trading, because he was heavily indebted and needed to earn £8000 per month (yes, really!) to 'keep his head above water'. (His words.)

My answer to him of course was 'probably never'. I'm sure you can work out why.

Moving on to another email received recently, this time from one of you good people, and I'm reproducing it here because it was a very good question indeed and I suspect might be of interest to everyone.

"Ian,
Am I correct in thinking you have changed some of your entry criteria to some extent over the last 2 years or so? I often go through old WICS. In some of the very first WICS I noticed you were taking trades on breaks of previous high/low provided there was good rolling support/resistance. Do you still trade high/low when there is other supporting evidence in favour of the trade (e.g. director deals, rolling S/R), or do you insist on breaks of support/resistance levels?
Many thanks,
P."

My answer follows:

"Good question that almost no -one asks!
'Yes' to both points.
Things change in the markets (though the same old things always come round again) and strategy needs to reflect that fact. Back then, in many ways it was easier, but over time, I found whipsaws getting more frequent & I altered things a little to cope - hence more need (for me) to see stronger indications.
Interestingly, my forex trading has seen the reverse - a couple of years ago it was less 'clean' than now.
It's just the ebb and flow of markets and we always need to watch that what worked really well last year, isn't beginning to become less effective this year.
Once the bear market properly resumes, good old fashioned moving average crossovers will probably become more significant again!
Ian."

That's why of course I feature the WICS charts the way I do - to help you keep up to date with how I'm seeing things develop, and hopefully to get YOU thinking about such issues, as my correspondent above so clearly does.

On to today's charts, then, and first we'll examine 'supporting signals' for the Pru, and then I'll put up a chart of JD Wetherspoon with absolutely no comment whatever, and let you come to your own conclusions about it.

All the best till next weekend,
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'.