New shorts

Another day, another lurch downwards. The trouble is, at least half the market must be thinking short by now so this could be the perfect time for a rally. On the other hand oil is soaring and Flash agrees (even though he's a speculator) that fundamentally it's not speculation that's driving up the market - it's stagnant supply and soaring demand, coupled with the low dollar and high political anxiety in the Middle East and elsewhere.

With a recession now the No1 news headline, Flash is half tempted to buy some equities but it's pretty difficult to figure out which might offer some value, especially in his price range, given that he can't afford expensive resources stocks or specialist infrastructure or engineering firms. He's eyeing some retailers and even - shock horror - some banks, but still thinks that there's way more downside to come for the banks - after all they haven't even declared their losses for this quarter yet - so is keeping away from them for the moment. His short in Barclays continues to work. As for retailers, well, today he went back in long on Game Group (given that Nintendo hit an all time high recently and teenagers continue to get pocket money even in a recession) only to see the price plummet as the FTSE crashed down this afternoon. He has still got a long position in Scottish and Southern Energy and - a new one from yesterday - ASOS - which may or may not get stopped out tomorrow. His other longs - Axeon Holdings and Stanelco - are both looking pretty anaemic too, although D1 Oils is holding up.

So with this in mind Flash decided to put a bunch more shorts on today. He increased his short position in MBIA, Allied Capital and vulnerable Eurobank Dexia; he upped his short position in EasyJet just in time for it to plummet as oil surged; he also upped his short in Thomas Cook. Persimmon also did exactly what he expected them to do today. A new one today is Starbucks - with the US consumer staring at the prospect of $10 gasoline (welcome to the real world, guys!) the last thing they'll be doing is driving to the mall to buy a $4 cappuccino. Plus with coffee futures hitting new highs and everyone feeling the inflationary pinch, Flash doesn't think that discretionary corporate croissants and lattes will be flavour of the month for some time to come. He realises that Starbucks has historically been wildly profitable (and in Flash Rabbit's opinion, pretty mediocre and evil with it), but he thinks that the value adjustment needed to restructure the business will drive the share price lower before things start to look up.

Short Dow, Short SPX, Short FTSE. All substantially in profit with stops in place should there be an unexpected bounce. But Flash thinks that's pretty unlikely over the next few days.