Tim Bourquin interviews Mike Parker, who talks about he uses linear regression channels (LRC) on daily and four-hour charts to find trades.

This week John Mauldin takes a look at some economic theories which help explain how the more that individuals hedge their risk in economic markets - the larger the network - the more the entire system is put at risk.

Credit, it turns out, soon reaches the point of diminishing returns. During the entire period up until 1980, it took about $1.40 worth of extra credit to produce a single extra dollar of GDP. Since then, the ratio has deteriorated. And now we seem to have passed the top of the credit cycle, with the credit industry unwilling to pony up more cash and output falling.

The release of UK CPI on December 18, which is anticipated to show that consumer price growth accelerated faster than the Bank of England’s 2.0 percent target, could prevent the central bank from cutting rates in January.

Lawrence G. McMillan reviews the options market in his weekly column for December 7.

Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for December 7.

Treasuries, the US dollar, and the Dow will respond more sharply to a surprising NFP read, as the unemployment rate will likely take a backseat to the headline news. And the most severe reactions in the market will likely be if NFPs fall negative, as this will nearly assure traders that the Federal Reserve will indeed cut rates next week.

The fall in the value of subprime-linked securities has boosted a group of funds which spotted the problems in advance. The decision to use derivatives to short, or bet against, low-quality U.S. home loans taken by a select group of hedge funds last year appears to have become the most profitable single trade of all time.

The global credit crunch that has rocked the markets since August has led European and UK interbank lending rates (Libor) to jump to multi-year highs while equity markets remain especially jittery and prone to declines. This has left both the BOE and ECB uneasy, as the instability of the markets adds to mounting downside risks to growth.