Well, that's September 2009 more or less in our wake now, and barely a sign yet of the coming mayhem - or is there? It's still just a tad early to say for sure if last week's drops in the likes of the DJIA, S&P500 and Nasdaq, provide evidence that the top of the bear market rally has now been made, because we could still see a final "exhaustion" rally before the fat lady arrives on stage to warble a wee ditty. But for all that, it's getting mighty close to this rally's curtain call, of that there is little doubt. In a recent Wall Street Journal, the September "economic survey" (where the WSJ regularly canvasses the opinion of around 50 economists) shows up very few bearish views.....in fact it shows none at all. Every single economist is now bullish, and the average figure being suggested anent the USA economy's performance for 2010, is now "plus 2.9%". If ever we needed strong evidence for the imminent end of the rally, that's it!

In the UK, the CBI (bosses' union) is now saying that the recession "will be over by Christmas." (See WICS of May 24th this year.....) - again a sign of capitulation by the last of the bears. The reason for their sudden change of opinion? "Consumers will be rushing to the shops before the January VAT increase." Ho ho ho.

Next, the Broon one is planning a law to force a reduction in government spending - he and Wee Allie had better make sure it won't be retrospective then. The Broon one's G20 (aka the Fudge Factory) plan to save the world is an interesting one - get the Chinese to buy more stuff. Hmmm, "That will create sustainable growth" (Broon), or "That would create yet another indebted society, but thankfully the Chinese are not stupid." (Williams.) You choose the better fit!

Moving on, but still with Broon, it looks like he'll be changing his hobby from pretend social work to metal detecting after that big discovery in a Staffordshire field the other week. Maybe he CAN save the British economy after all, if he gets lucky?

Still in the UK, the Mandelson one is suggesting (reference foreign companies buying what's left of British industry) "We need to protect the UK's industrial base..." Words are inadequate for a suitable retort to that! (Well, there IS one word, but it's not for a nice family read like these ramblings...) And Mervyn the Bank of England chappie, is suggesting that British banks are "still not strong enough to lend enough to ensure economic recovery". You can bet on that! Banks everywhere are still sitting on a whole load of very toxic nasties to which they have not yet admitted - and over in the US of A, if certain members of government get their way (and they just might!) the Fed will be forced to admit to an awful lot of jiggery - pokery that could see many more US banks fall apart. You heard it here first! Still with banks - HSBC's chief exec is relocating from London to Hong Kong - a sign of things to come perhaps?

Anyway, just another few wee snippets before an email or two that are well worth sharing with you, and first there's the news that airlines are planning to "cut carbon emissions by 50%". How? By mothballing half the fleet? Nah - don't be so naive - by purchasing carbon credits! (Thus cutting emissions by exactly nil, and charging customers more to fund the credits.) Another ho ho is called for methinks. And Land Securities has sold the Birmingham Bullring development of £210m (less than cost?) to help repair its broken balance sheet. The Australian government has wasted some taxpayers' cash by taking a one - third share therein. Oh, and re the big shortfall in the pension pots of FTSE100 directors - will they just take a reduced pension in due course, given the overall state of things? Snowballs in a very hot place come to mind.

On to emails then, and the first one is from "A.Z", my regular correspondent from the Far East - he makes an interesting psychological point that's well worth considering:

Subject: Passive income cashflow in Trading

"Hello Ian ! hope you're well. The question is related to Trader pyschology. I would suggest it is very important for a Trader to have passive income apart from trading or a job somewhere. for example, property rentals, royalties, dividends from a bank account, etc. This would relieve the desire to have always a trade open, so the trader can be peacefully out of the market when he/she can not see the potential low risk profitable trades. Otherwise the need to get some dosh every month to earn at least amount enough for living makes traders take too much risk and not follow the methodology. Would be usefull to hear your ideas on this issue. All the best from far-far East, AZ"

My reply was:

"A.Z. - as always, an excellent question! "Yes - absolutely" is the answer. Ian."

The next email comes from "Chris" - again a regular correspondent who is meantime taking time out and travelling the world. Currently he's in the USA and this is what he sent the other week:

Subject: Travel Notes Pt 1
"Hi Ian Well I'm finally off on my travels and as promised I'll try to pass on my impressions as I travel. I started in Boston, somewhere I have worked regularly and generally it seemed normal but everything was quieter than usual.
People seem a bit nervous but hopeful, there are more businesses closed than I remember (even in the well heeled areas) but less than I expected. I had dinner with a friend who works for a big bank over here and she is of the same opinion as us but said there is a lot of cash still out there not earning anything, hence she thinks the buying will continue for quite a while.
Secondly we talked about the dollar and I mentioned the theory about dollars disappearing but she said not many firms/funds are going down or making a loss at the moment and the US govt is printing more dollars than are disappearing. Food for thought.
Travelling on from the City, the small towns are showing much more of the downturn. More shops closed and queues at the soup kitchens, and this is in the rich North East. I even visited a huge popular mall and it was empty. I haven't watched much TV (US TV even worse than British) but when I have listened to the news it is all very pro recovery and it's all OK now (and people are buying it).
In summary, people are hopeful that it's all over but nobody seems to be spending much either because of changing habits or lack of cash. I'm not sure if this any help but it's good to stay in touch anyway.
All the very best & keep up the great work. Chris."

My response was:

"Chris - very many thanks for this - interesting indeed! Yes, I agree that people are "buying" the recovery idea & are diving in to purchase stocks - and also gold to an extent. But as we know, the "recovery" is entirely false and predicated upon government spending/bailouts/tax refunds/general "moving money around to make it all look OK". It's all smoke and mirrors of course and the "changing habits" you mention will bring consumer spending on anything beyond necessities, to a grinding halt soon enough - as will the ongoing destruction of personal retirement funding. The only specific point I disagree with, is your banking friend's view that the Fed is printing more USD than are disappearing. Again, that's all smoke and mirrors promulgated by the Fed and bought into by the media, but it is not the case. The Fed will not be able to keep up with the destruction of existing dollars - again, we'll see that soon enough. I hope you're enjoying your adventures! Ian".

Interesting stuff indeed!

On to some charts, and first tonight we'll look at Land Securities seeing it got a mention above. It has fallen out of its wedge and may soon perhaps receive some support before a bigger drop. Then we'll take a look at the main French index (the CAC40) to see if it might try to close a gap before it falls away altogether. Finally there's an update of the S&P500 chart from last weekend, where we'll examine both rolling (dynamic) support and resistance along the bottom and top lines respectively of the wedge formation.

That's all for today then - see you again in October!

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'.