Gosh, it hardly seems like a whole week since the last issue of these ramblings! It's good that the English bank holiday weekend looks like having some decent weather at long last so I hope you enjoy it if that's where you are based.

Pretty much 'the same old' during the week I see, as markets recovered as predicted, so I missed very little by having been at the riverside for a couple of days....well, actually I 'missed' a couple of nice salmon that turned over my fly but failed to take it - my own fault I hasten to add. Ah well, that's fishing, but one lovely fresh - run fish did end up in the smoker for all that!

I note that '30% of UK workers have second jobs' according to Fool.co.uk so not everyone will have time to enjoy a sunny bank holiday then - times must indeed be getting hard. Those of you who trade while still in other employment I guess could be classed as 'having second jobs' too though!

Talking of hard times, it seems poor old Barclays was forced to borrow £314m from the Bank of England on Monday because no other bank would lend overnight to it, and it would not have admitted to the fact had HSBC not blown the whistle by telling the world about it. This financial sector trouble most certainly is not going to blow over. Even US Treasury Secretary Paulson suggested during the week - as he turned the key in the stable door - that "If we don't deal with this (sub prime meltdown) it could spill over and become more serious". A lender in Arizona, First Magnus, went bust during the week, closing 300 branches and sacking 6000 staff - who have not yet been paid for last month. It's the fourteenth major lender to have gone this year and Mr Paulson's horse has not only left the stable, it's galloping off into the sunset just like in the movies. Ah well - nothing seems to be bothering investors though, as the US indices keep pushing ever upwards and flummoxing the bears yet again! The reason of course for the ongoing current bullishness is as mentioned last weekend - a belief that the 'Greenspan Put' (type that into the WICS search engine if this is your first ever visit to these ramblings) is still alive and well via the new guy's determination to cut rates at the first sign of trouble. The general feeling in the States is that investors will always get bailed out by the Fed, no matter what mess they are in - indeed, the deeper the gloop, the greater the chances of being rescued. And that feeling of course drags other world markets up in its wake.

But this time round, the term 'wake' might be appropriate when things don't improve and people witness the death of their investments - sure, for a time the Greenspan Put is going to work, but not for long. Why not? Because any interest rate cut will hammer the already very weak dollar - and that will send the cost of imports soaring. Add to that the fact that millions of American mortgages are due to go on to the 'standard variable interest rate' over the next twelve months or so, after having been obtained at very low 'teaser' rates offered by lenders, just to get the business. The lenders of course thought (wet behind the ears) that the more they lent, the more they could package up and sell as CDOs to the even greater fools (type CDOs into the WICS search engine if you're new to this stuff) and their own risk would be nil but their profits would be vast....ho ho ho. Many US householders (and I do mean 'millions') are going to see huge increases in their monthly mortgage payments - what will that do to the overall US economy, which just as with that of the UK, is hugely dependent upon 'consumption' rather than 'production'?

Hard times at Ryanair too, as suggested in an earlier WICS - I note they have just introduced a £2 check - in fee. Job security for ground staff (online check - in will still be foc) may not be high on Mr O'Leary's priority list.

But it's good to note that there will be no property - related problems in the UK. The chairman of Persimmon has announced that the UK will avoid a mortgage crisis because of its 'disciplined' nature. Ho hum - it's always good to hear an unbiased opinion.

Before we move on to discuss a chart or two, I thought I would share an answer I gave during the week to an excellent question posed by one of you - thanks Andrew! He makes a very good point and it's one that I know causes a wee bit of concern to a few of you. You'll see that Williams however, either has his head firmly in the sand or he actually knows what he's talking about.......just so you know, I detest sand...

"Hi Ian
Do you subscribe to some of the prophet of doom mongers going around saying that this Credit Derivatives business and hedge funds etc could cause a global meltdown and an unravelling of the world financial system. If so what are the chances that after an initial drop in the stock market it will no longer exist, not to the extent that you could trade profitably, exchange rates would be frozen, whatever you make on spread betting is not worth anything anyway because the only thing of value is wheat and carrots and so on and so on. Could it really get that bad. People do love to blow things up a lot - Y2K, global cooling back in the 70s as good examples of things never happening but being talked about in terms of Armageddon ( global warming I would dare to put on that list as well). Do you have a worse case scenario and what would you be trading in that scenario or how would you be funding your lifestyle?
rgds
Andrew"

"Andrew - 'doom & gloom' was never 'me'! Things will drop in price, maybe a lot - housing for example will take a major hammering in my view, & recession will arrive for all the world pretty much - but that has always happened historically - & it always goes away again in the business cycle. This coming recession will be a major one, of that I'm sure, so 'assets' are a bad thing to be holding I reckon & cash overall will be a good thing to have, because at the bottom, those with cash will be able to buy things very cheaply. My worst case scenario doesn't exist because I don't see life like that - only in terms of opportunity. Global warming (as mentioned in WICS) comes under the heading of 'major scam' in my view - it's a herd mentality thing as politicians well know & it's a fantastic gift to them. Traders can sell the market down & buy back at the bottom, as has always been the case. Investors will get wiped out in many cases, but investors at the bottom will get rich. No worries in other words!

Ian."

Anyway, I hope that view might provide a little reassurance - one of the really big problems facing the financial world at the moment is that too many 'movers and shakers' therein, are much younger than in earlier times because 'experience' has been valued much less these past few years than has 'being good with a computer'. These whippersnappers have never seen a bear market, never mind a full blown recession, and they have never been proven 'under fire'. When things start to go against them, they panic - simple as that. Those who don't panic will make money.

Okay, on that note, let's take a look at a chart or two - first we'll examine that of Spectris, because it's a good example of a 'support break' and of DMA management. I realise that it's a 'stable door' one in terms of an example but it was mentioned in WICS a long time ago so it should have been on your watch list! Then we'll look at a great example of 'rolling resistance' ('dynamic resistance') on the chart of Northern Foods - not all support/resistance is horizontal and I hope you'll be able to see that here. Finally we'll see how Paragon shares have fallen out of their earlier channel and again are experiencing rolling resistance, as well as a wee bit of horizontal support along 400.

That should be plenty for this weekend - as mentioned earlier, I hope the sun is shining for you and that you're having an enjoyable long weekend. Please note that there will NOT be a WICS next weekend (2nd September) and there will possibly not be one the following weekend either, partly because I have to get a wee operation on my eye on Wednesday so I'm not allowed to go near a screen for a few days thereafter, and partly because I'll be travelling the following weekend, all being well. Those of you with video access will get the usual dose on Tuesday evening this week, not Wednesday, then there will be none till the following Wednesday 5th September. Mentoring answers may be a bit sporadic for a while - certainly I won't be using the computer from midday Wednesday till at least the following Tuesday or Wednesday. (Lest you worry about me - this op is no big deal though, honestly!)

Anyway, all the best till the next time.

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'