A bit of a mixed bag today, as the Silly Season slowly draws to a close and the world gets back to what is laughingly termed 'normality'.

Little in the 'Big Picture' has changed, as far as I can see - the major European and American indices have fallen back a fair bit but in the main, the spirit of denial is still alive and well and I therefore expect to see yet another overall push upwards before the autumn brings the anticipated, possibly savage, drop back into the grip of the overall bear market.

On 6th and 13th February, 6th March, and again on 26th June, WICS made mention of what might be going on in the FTSE100, and today I have again put up its chart because there are a couple of points of overall interest thereon.

The next thing I want to touch on today, is 'volume' because overall there seems to be a wee bit of confusion as to how important it is. Frankly, it's not massively significant in the usual scheme of things - just another 'clue' sometimes to what might be going on, but mostly all it tends to do, is reinforce other clues - for example, on today's FTSE100 chart, the fact that volume has fallen away as the price has been dropping, merely reinforces my 'bigger picture' view that support will probably be found soon and the price will (temporarily) turn back up again. (It could also be validly argued, of course, that the volume drop is because no-one is at their desks!)

However, again in the context of being patient, volume does sometimes indicate 'something about to happen' and I have put up a couple of charts of my old favourite, Alba, to show (I hope) what I'm getting at.
I think the main thing to keep in mind when examining volume, is that you should only look at it as part of the overall picture, never in isolation.

Besides Alba, another one you might pay some attention to is London Clubs International - after a long sideways period, it looks like it might want to go up a bit, and at this stage any volume increase would tend to reinforce the upside potential. In the case of SCI Entertainment the effect is already apparent. I haven't put up these two charts because you need to do SOME research yourself!

Moving on, I mentioned Autonomy on 17th July - is it now going to get above its 8th August high? It fell back on Thursday but held exactly on 25 dma rolling support. We'll see. (Before you rush to tell me I used the 50 dma on 17th July - I know I did - overall 50/70 used to work well on Autonomy, but that doesn't alter the fact it was the 25 dma it recently bounced off! It's possible that now, the 25/45 pairing will start to work though it's too soon to tell. I'm always seeking to use the shortest viable dma simply because that's what generally provides the ideal compromise between too tight a SL (stop loss) and handing back too much profit.)

And will Business Post get above 700? Perhaps.

A fairly frequent question I get is "Over what timescale might you consider lines of support and resistance to have significance?"
My answer is "Any timescale at all, because most people don't trade in shares, they buy them to hold them 'for ever' - hardly anyone finds it easy to get rid of a share that they own, especially if it's losing money".

I have put up a couple of charts of Babcock International to illustrate what I mean - the current price is hesitating just above the 'high' of 18th October 1995 - that's correct - nearly ten years ago!
People buy and hold shares with little thought to real returns - and the truly interesting thing is that once the price is nominally 'back up where they bought it' they sell!
"Well, it was a long wait but at least I got my money back" goes the sentiment, forgetting entirely about the effects both of inflation, and the 'lost opportunity cost' of their capital over the period. (By 'lost opportunity cost' I mean that if the money had not been applied to buying the shares, it could have been doing something else, like earning interest for example.
And yes, I know about dividends, but let's not overcomplicate things here!)

Anyway, what is likely to happen now with Babcocks? Given the fact that for sure, some long term shareholders will recently have baled out at what they fondly imagine to be 'breakeven', the price has held up pretty well, so probability favours a bit of an ongoing rise - we'll see. It's certainly one to keep an eye on.

The real irony of course will be if the price of Babcock now keeps rising - those who have recently sold it to 'get their money back' will inevitably sit and watch it go up. Eventually, if it goes high enough, their greed, plus their fear of 'missing out' will cause them to buy it again.
At that stage, I wonder who might be selling it to them? Wouldn't be the 'strong holders' who know when to take their profits, would it by any chance? I dunno, I'm just a simple country bumpkin.

Well folks, that's yer lot for now - I trust you are having an enjoyable long weekend. I'm off to catch a few rays, as my son so eloquently puts it.
All the best,
Ian.

PS: the password will change some time on 31st August - the exact timing is uncertain, so just keep using the current password till it stops working. You'll receive an email with the new one over the next couple of days, unless expiry of your subscription looms of course.

PPS: I'm informed by my publishers that the 17th September workshop currently has two places still available, so phone 01709 820033 if you want to attend.

.'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'.