Queasy but not so sleazy

Another unpleasant day yesterday as buyers headed for the emergency exit once again. Flash Rabbit is still in a buying mood but the herd over on Wall Street put paid to most of his gains as they headed for the vomit bucket on more bad vibes about debt, banks, recession and, that old nemesis of Uncle Sam, middle eastern militancy. Looking at the weekly chart on the Dow, it's still in a relentlessly downward spiral but Flash Rabbit can't help thinking that blue chip stocks are becoming ridiculously cheap. Cheap to the point of bargain basement discounts in the case of companies like General Motors, Intel and Ford. Interestingly the Asian and European markets haven't melted down in quite such spectacular fashion which leads Flash Rabbit to believe that there may be some kind of a bounce on the cards. On the other hand yesterday he lost such a lot of money trying to be long while the rest of the planet continued to be short that he is beginning to get a very edgy and nervous feeling in the pit of his stomach. How much more cash can he afford to risk? And if he, the tiny minnow micro trader is feeling that, how are the big whales and sharks feeling?

By about 5pm yesterday Flash had had enough. He kept trying to find an entry point to go long on the Dow and every time he did it his position got wiped out for nasty losses. So he stuck a short position on, cut his S and P long, went out for a curry, and came back with a satisfied stomach to find the day's losses returned. So now he's doing the bi-trade thing with a short Dow in place from 11300ish and a long Dec future from around 11000. Win win. (or at least no lose -lose).

Of course if oil does spike back up (and Flash Rabbit thinks that it probably will at some point, but not before it's adjusted down a bit, and the economy buys some time to make some adjustments for a post-oil world) all bets are off, as clearly not enough will have been done to curb the commodity bubble, which is feeding through to agony for companies and households everywhere.

Flash Rabbit has also been trying for days now to short the euroyen cross but it seems that those Japanese people just can't buy enough euros, and they hate their own currency. Why on earth anyone would want to buy euros right now is completely beyond Flash Rabbit - it seems to him that the European economy is on the cusp of an even bigger recession than the US and the UK as it has real structural problems, higher unemployment and is way over exposed to out of control property values and bad, bad debts. At some point the euro has to reduce in value otherwise inflation will put an end to any kind of recovery...In the same vein Flash Rabbit thinks that the pound and the euro are still ridiculously overvalued in relation to the dollar...but the market seems to think otherwise and for the time being, if his last current attempt to sell the pound against the dollar bombs for the umpteenth time, Flash Rabbit will retire from the currency trade.

So like his friend and mentor, Flash Rabbit is treating this, with a slightly nervous feeling in the pit of his stomach, as a buying opportunity. However he has hedged his buying with the usual sleazy shorts in Thomas Cook, Starbucks and Dexia, all of which are paying off handsomely. He would prefer to make money by supporting companies but he just can't afford to lose more cash.

Essentially Flash Rabbit is trying to do the decent thing and be optimistic in the face of such overwhelming pessimism- surely there are opportunities out there. On reflection, he has never been so long. A big risk. Currently he is long (in small amounts with big stops) ASOS, Avis, WS Atkins, Axeon Holdings, D1 Oils, Ford, British Airways, BT, Scottish and Southern Energy, Game Group, Workspace Group, Lonhro, Northern Foods, Stanelco, and public transport operator FirstGroup. And - a cheeky and risky one - but unbelievably cheap joke - Bradford and Bingley. 60% which are still showing gains. Which he sees as a positive omen. He's prepared for the worst but hoping for the best. And if he can muster up any more cash he might just buy into a long Intel position later this afternoon, depending on how things go.