Margins, errors and unknowns

Trading plan for this week - try to stay cool calm and collected even as the hurricane batters the Gulf of Mexico and oil perhaps spikes though the roof. On the evidence of a late Sunday night, the currency markets seem to be shrugging off the oil spike and USD/GBP, EUR/USD and EUR/JPY are behaving perfectly, from Flash's point of view, i.e. euro down, sterling down, dollar up, yen up. And if the hurricane isn't quite as bad as expected Flash is perfectly poised to take advantage of any bounce of relief when normal trading resumes on Tuesday.

Flash has Dow longs in place from 11180, 11365, 11378 and 11428 and he is hoping to hold onto them through thick and thin this week - if not there are stops in place which will ensure he doesn't lose any money. Everything in his fund is broadly unchanged except that he's bought even more HBOS and Barclays, and has dipped a toe in the housebuilding market with a purchase of a long position in distressed US housebuilder DR Horton. He might also buy some Taylor Wimpey tomorrow. On Friday he bought more Ambac, BT and Lehman as well...He's hoping that there is enough margin in most of his positions to ride out the volatility. The accuracy of the currency bets is offsetting the dampening of profit on the long indices - but flash remains long on FTSE, S&P and the Dow, and is hoping to stay long for at least a couple of weeks.

One anxiety is that his fund is totally underexposed to the opposite view - that the banks and housebuilders are fucked and that the dollar is as much of a basket case as any other currency, that demand exceeds supply in commodities - energy especially - and that the price of oil and gas could be headed back into the stratosphere again if supply gets seriously disrupted either by acts of natural or political/diplomatic violence. Of course, if energy prices do rise further and inflationary pressure builds back again it's hard to see how any of the world's economies will have anything other than a serious crash landing. Flash thinks that if oil goes sky high again then demand will be choked off even more, meaning that it will correct back downward because everywhere will be plunged into deep, deep recession. So the disinflationary call from a macro perspective remains valid, whether the disinflation takes 3 months or a year or more to work through. The other bit of Flash's view is that everyone KNOWS that the banks and housebuilders are fucked and therefore they are a total bargain at the prices they are trading at. Most of his long financial positions have sufficient profit and stops to make sure that he can't lose on them, so the risk/reward of taking his view seems pretty solid.

And even if we have even grimmer data/terrible results to come, it's the overbought commodity and resources stocks, and the other traditionally defensive plays that are likely to come down harder. Well, that's what Flash is betting on anyway, and he has stops and margins in place in case a major rethink proves necessary.

PS As a hedge against some of this inflationary uncertainty Flash has broken the habit of the last couple of months and taken out a small long position on the Gold Dec future from 838. It's purely a hedge - if the rest of his view falls into place then he will take a small loss, but given that oil is likely to be nasty this week, Flash is willing to take this risk.

Buying back the banks

So, a couple of good days for the fund. Flash has been steadily buying into quite a large portion of financials - he's bought more Barclays, a load more HBOS, all at below 290p which has been an excellent trade so far, even Lehman Brothers at 1321 (which has proven to be very lucrative, and is comfortably in profit with a stop there to guard against reversals). Perhaps some of the bounce upwards in the financial sector can be attributed to a good amount of short covering, so whether the financials' rapid ascendancy is completely sustainable may be open to question - especially if/when Lehman/Morgan Stan/Citigroup etc unveil their widely trailed writedowns, but it's possible that the market may ignore the writedowns altogether if other indicators look positive. Flash has increased his long position in bond insurer AMBAC, which went mental today and jumped up 40%. Flash has also added to his long Dow and S and P 500 positions with the result that the balance on his trading fund is now looking very healthy.

The rationale for all this is that perhaps the recessionary gloom is overbought - the GDP figure coming out of the US today certainly seemed to confirm it, even though everyone agrees it won't be repeated in Q3 and Q4; the disinflationary call seems to be working through, hurricanes notwithstanding. Gold has been madly volatile but Flash has picked up a few quid still trying to be short - but he's closed out the big short from 977 as it doesn't seem to want to drop much below $830 an ounce. The dollar long trade has also lost a bit of its shine but USD has certainly found a new trading range. Flash made plenty on the way up, and Flash still thinks that sterling and the euro are even more vulnerable than USD. He's missed out on the last couple of days of sterling's demise but will have no problem banging on another short USDGBP trade when he finds a decent level to go in at - he went back short EUR/USD from 14790 once the fallout from the GDP figure had settled and that's worked well this evening.

Flash is now trading on some sort of disinflationary recovery - suddenly costs start to decline and profit margins therefore increase, even if demand is a bit slack - and some sort of bottom in the housing market - hence now quite a large long position in HBOS and an even larger long position in Kingfisher. British Airways has also been pretty kind to Flash. It's interesting that the oil price spike hasn't taken the wind out of BA's sails - which Flash sees as a strong sign of some kind of stabilisation in the share price.

Crocs, Blacks Group, Ford and GM are united in their mediocrity. However Flash bought a couple of new stocks to add to his ever expanding portfolio of small long positions - Cineworld group at 110, which is showing a little profit, and some Marks and Spencer. In general, financials and consumer stocks with a bit of technology and some strange small caps are his main call. He thinks that there are lots of bargains to be had and if he can manage to hold this line through the inevitable choppiness and volatility there could be some very big wins. He's still, along with plenty of the hedge funds, interested in Scottish and Southern Energy but he has enough on his plate at the moment and no spare cash so is sticking to his winning call. He's scaled back his exposure to currencies a lot and has piled most of his fund into equities, where he's planning to stay for a few months, if he can manage it. As he is also managing to hold down a full time job he's trying to get into some positions that he can just hold rather than being in and out of some of the more volatile markets, particularly the currencies and commodities.

PS - couldn't resist, following news of one of the UK's MPC members calling for an urgent rate cut - sold GBP/USD again at 18300.

You win some, you lose some

It was a big mistake to go to work on Monday and leave most of the positions from Friday intact. Some nasty drawdowns. In particular Flash's confidence in the financials has proven to be expensively misplaced. he's decided that trying to be long financials through spread betting is a bit of a mug's game at the moment. The Barclay's long from 261 remains, but the Lloyds and HBOS longs spectacularly failed - very bad timing for those trades. Likewise BT. So Flash has bought some physical BT shares at 162 and some physical HBOS shares at 280. He thinks that even if they go down further he will still have the asset, whereas having to put enough margin in to keep the trade safe is just killing his capital.

The Dow longs - well, there were stops on those so he didn't lose anything; he still has two dow long positions intact - one from 11180 , another from 11321. S and P, FTSE and Nasdaq longs all stopped out for small - no, tiny - profits.

So the 'calmer, light touch, trading strategy' expounded in the last blog has proven to be expensive - very expensive - Flash gave up 25% of his gains in a single day on Monday as the market panicked about the dreadful credit mess.

The currency trades are still happy though. But even gold has considerably strengthened and Flash is beginning to consider closing out his short from 977. He hasn't got that much time to watch the market so it might prove to be the sensible thing to do.

So as of today, here's Flash's portfolio:


Antofagasta - short from 552 (running a small loss)
Axeon Holdings - long from 77p - this has been a disaster but Flash lives in hope
Avis - long from 12p - in deficit
British Airways - long from 221
Barclays - long from 261
Black's Leisure - long from 102 (in deficit)
BT - long from 162
Crocs - long from 460 - had a lift as high as 530 but now in deficit
D1 Oils - long from 17p - a nice winner
Firstgroup - long from 515 - a big success
Ford - long from 504 (in deficit)
General Motors - long from 1050 (in deficit)
HBOS - long from 281
Kingfisher - long from 96p - this has been very good
Lonhro - long from 26p (in deficit)
Powershares Global Water Portfolio - long from 2120 (in deficit)
Stanelco - long from 0.55p - looking hopeful
Tribal Group - long from 131p - fine if bland
Woolworths - long from 0.59p - pretty good so far
Workspace Group - long from 118p - so far, so good

Reading through the list there are quite a few pretty distressed equities there. Hmmmm. Maybe not such a balanced portfolio. But Flash will persist for now, because in spite of the volatility, he remains fairly confident about some sort of rebound in equities, particularly large cap consumer stocks and some specialist small caps. However, the currency and index positions have been much kinder to him than the equities. The financials have been utterly horrible. Providing he can keep the margin to run all the losing positions Flash remains reasonably relaxed. He's trying to think in a longer timeframe than day-to-day. But even intraday the volatility has been hideous and very, very nasty.

Watching the currencies closely. May blog about those tomorrow. The question is, has the dollar found a new trading range, or are we halfway through a bigger commodity/resources correction? Flash hopes for the latter but fears the former, particularly if a massive financial car crash is about to break in the USA, or the Russians decide to turn off some of the energy supplies to the West. EUR/JPY short just keeps going. Very good, and Flash thinks that bodes well for the disinflationary theme that he is trying to stick to.

PS. It also occurs to Flash Rabbit that if Fannie, Freddie and Lehman (or one of the other big investment banks) go to the wall, and the oil/commodity prices continue on their way northwards, it could trigger off a 1929-ish selloff in stocks. Very nasty indeed. So he may just bang on a hedging short position on the Dow and FTSE.

Burnout

There's a video game called 'Burnout' where the object is to race at incredible speed around a track, smash into as many other cars from the rear as possible, avoid crashes but smash up other players, but generally avoid going up in smoke yourself as much as possible.

At the end of last week Flash sat down and did a fairly systematic analysis of all of his recent trades. He made the following observations:

- a tendency to panic when the market gets really volatile and cut or destroy even the winning positions
- a tendency to get very nervous when he hits a negative balance or things appear not to be working, even when the longer term logic of the trade remains intact
- a tendency to take profits way too soon and not to let really winning positions run their course
- some really shrewd trades which because of anxiety, nervousness and neurosis he didn't get anything like the maximum value from.

All perfectly usual behaviours for the novice trader. And at least he hasn't completely imploded.

Now it strikes Flash Rabbit that much of his recent trading has been a bit like the video game 'Burnout'. He's been dodging in and out of positions, racing round, switching in and out of different markets, sectors and indices very fast, and generally overdoing all of the trading. In some ways he shouldn't be complaining. He's way up - he's tripled his initial capital - but the burnout syndrome has meant that he's also destroyed perfectly good positions when he's hit greasy patches of volatility. He's also burned up quite a bit of money on the way - for example, early this morning he cut half his dow longs for smallish losses, waited ten minutes, then changed his mind and put them back on again, only to return to find them destroyed when he got home. Had he left everything alone - the stops, set in the upper 13000s, were perfectly wide enough - he would be several hundred pounds richer. As for the gold trade - he's done really well on that but if he'd just left most of the shorts alone he would have been up fivefold by now.

So for the next few weeks he's going to try a different approach. He's kept everything in place but has widened the margin on as many of his positions as he can afford. He is going to run this set-up without chopping in and out, unless there is some almighty catastrophe that causes him to revise his view. He may add a little more risk if he feels the market is moving in a direction he likes, but basically he's going to keep everything calm and simple. This is partly expediency - he's back at work full time and doesn't have time to watch the screen - but it's partly also a result of experience. And - extending the automotive theme a little - he's put a couple of tiddling long positions on General Motors and Ford.

And Crocs went up by 15% today, Woolworths by 10%. Now that's not bad.

Banks, tanks and crocks of gold

Well the collapse in gold proved to be as spectacular as predicted. Extreme volatility as the commodity bulls battled it out with the sellers - the FTSE jarred by a massive selloff of miners, otherwise it might have been up 50 pts. What a day! Flash is too tired to post a proper blog but in lieu of that here's quite an amusing exchange - if you follow the sequence of events and posts as Thursday unfolded. Flash's fund is now up 300% from February. Not a bad return at all. He's cut back the risk in his portfolio and is running just a few dow longs, a couple of S and P longs, a Nasdaq long and most of the aforementioned equities (although Workspace group collapsed today, he's planning to buy some more shares while they're cheap), and the short EUR/USD, short GBP/USD and short EUR/JPY trades. And still short gold from 977!!! Picked up some bank shares today - HBOS - risky, Lloyds TSB and more Barclays. Gold at $720? Possible. Perhaps even $650. Getting very bullish on equities, particularly large cap, resilient big retail brands which look pretty cheap. Even Woolworths! The only things (and they're big things) that might stop the Dow is, in Flash's view, yet another major financials car crash or more middle-east/caucasus trouble. But with inflation the top news headline and recession splashed all across the papers, Flash's attention is turned more to what happens post-slowdown. That's why he's buying as many equities as he can lay his grubby paws on. Even Crocs went up today. So that's some sort of a sign.

Profit taking

Well, the short commodities bet doesn't look like quite such a sure fire thing - it's been a good run and so Flash has reduced his exposure to short gold quite a bit, just leaving a small short running. And with a spike back up in oil and gold the old spectre of short financials/retailers/long commodities has returned with something of a vengeance over the last couple of days, leaving the Dow longs looking a bit less healthy. But Flash is persisting with this theme, seeing the current turbulence more as a shakeout than another decisive move downwards. He does, for now, have a hedging short position on the dow in place from 11800 which in hindsight proved to be an even better idea than it seemed at the time.

Flash has, however, increased his exposure to short EUR/USD. He thinks that sterling's collapse yesterday could easily be followed through today in EUR/USD when attention is drawn to eurozone economic data. He's pared back the NZD/USD and AUD/USD shorts; if commodities are on the rise and more horrible US data comes out the dollar is probably due for a little bounce. On the other hand the antipodean central banks are actively talking about cutting rates which has forced a small defacto currency devaluation there, and the sense is that a lot of dealers have been abandoning the carry trade, which has propped up demand for these currencies. It's hard to see how the UK and te ECB could put rates up unless they want to crash the whole of europe into deep recession. On the other hand there may perhaps be some scope in the US for some rate increases later this year and into 09, making the USD a more attractive prospect. A further more alarming consequence is possibly, at least according to Flash Rabbit's rudimentary brain, that declining central currencies against the dollar will have some inflationary effects at home - they will make imports more expensive and make everyone feel less rich. On the other hand the dollar is, in a longer term view, probably somewhat oversold - it's had more than 2 years of rapid decline and some big corrections are necessary. And if the dollar strengthens then commodity prices drop, which in turn takes some inflationary pressure out.

Equities aren't looking so happy. Kingfisher spectacularly collapsed in the wake of the BoE's comments about recession and the dire inflation data; all the financials have taken a hammering; and BA has dropped back a lot in the wake of higher oil. However, ever contrarian, Flash has been adding some long equity positions - he's bought more of Barclays and Lloyds TSB; bought a bit of BSkyB, and some of Cadbury - who will gain from the drop back in food and raw material costs - if it persists. He's been making sure there's plenty of margin on all these positions given how unpleasant and volatile trading has been over the last couple of days. He's pulled out some cash from the trades and is racking his brains to find a new angle - he's beginning to think that going back short on the airlines and anything to do with expensive consumer discretionary spending might be a good idea if oil continues to head up above 120 a barrel. But perhaps if it stabilises between 112 and 116 - he's been targeting a drop back to the 100 mark - things won't look quite so bad - and a strengthening dollar will also put some downward pressure on oil and gold. And there's no evidence that the slowdown in consumer spending and demand has reached anything like a bottom, especially in europe. Which means that on balance he's still short commodities, long equities, and long USD.

Overnite sensation...and a nasty hangover

Flash Rabbit couldn't believe his eyes when he woke up this morning. The dollar had strengthened even more and gold had collapsed. He's now seriously in the money and has left things pretty well as before, but took the pause in gold as an opportunity to move some stops and do some profit-taking. However the gold collapse shows no sign of abating - Flash's next target for gold is around the $720 mark - if it can do -$150 in a couple of weeks he doesn't see any reason why it couldn't do more. So most of the short positions remain firmly intact, although he took a grand out to pay some of the bills.

It's been a pretty thrilling couple of days and Flash has been exploiting leverage to the full which has led to some pretty dramatic moves in his account - he nipped out for half an hour around lunchtime and came back to a 40% pullback as the indices and currencies gyrated which was a bit of a shocker - but fortunately he's learnt the lesson of keeping enough margin and didn't blow up any money. He's getting pretty nifty at using some of the margin from the more profitable trades to set up some leverage. And he's keeping those currency trades going - has taken a bit of profit on the EUR/USD short but otherwise they are all running well. He's expecting a bit of a fightback from the dollar bears but thinks that momentum is with the dollar (and also, in its own way, the yen). Especially when the full depth of horror of the economic data coming out of europe hits home.

What Flash can't figure out is that even with all the chaos and anxiety in Georgia that energy and gold still managed to keep their descent, but it all went a bit screwy today even as the Russians pulled out. Precisely the opposite of what one might have expected - but it became a bit clearer watching Bush late last night that the USA had no intention of starting World War 3. Today's turbulence must have had something to do with another forecast of higher oil prices and the bad guys coming out to play the short financials/long energy trade - they just can't keep off it...He had a nailbiting day yesterday when he was full on short gold and long dow, but holding the view - and taking the risk of holding some heavily leveraged currency positions overnight - really paid off. He takes this as a sign that there is a major structural adjustment in progress, and thus is sticking to his guns.

A few regrets - not hanging on to the UAL Corp long - they're up a ridiculous amount from when Flash bought them at 693, and he wishes he hadn't jettisoned them in all the turbulence; but the BA long and Barclays long have made up for that. The equity positions are all looking pretty positive; he's still holding on to that long Dow, and has added bits to it along the way; he's also long FTSE, S & P and now Nasdaq as well. Even with today's heavy financials sell-off he thinks there's tons of value still to be found in equities, especially in some very underpriced retail and property stocks - so he's added to his long positions in Workspace Group, Woolworths, Kingfisher and Blacks Leisure. D1 Oils has also been excellent - sitting at 40p and he bought them at 17p. He bought a bit of Cadbury and currently has enough profit on that trade to buy around 2 bars of Dairy Milk - not so impressive; He's keeping on that too, and has even added to his long in Crocs! We'll see.

Generally - it's the usual problem - too many choppy trades, and not holding his nerve and his view for long enough. But he is learning, and the cash is now flowing in. Just as well because he hasn't got any cash coming in from anywhere else right now. Very risky. But very rewarding.

Big Time

Wow. A swift overnight move in currencies has left Flash Rabbit with a very big grin on his fat, greedy face. It's been a rocky couple of days - if the market is preparing for some seismic shifts there are bound to be earth tremors but the payoff from this earthquake looks set to be very significant indeed.

Flash's fund is now up 175%. That's right, 175% from a February start. I wonder if any of the major hedge funds have managed that rate of return? OK, Flash is only trading in pennies but this just shows what is possible...

Interestingly it's been in the currency trades where Flash has had the most success. His conviction call - that the euro is headed for a fall and that the dollar is poised for a comeback - worked beautifully, especially after he spotted what seemed like a top in EUR/JPY and it tumbled spectacularly during Trichet's press conference yesterday, and hasn't looked back...

The 'what ifs': -

what if he'd stayed up just an hour later last night, spotted the big currency moves gathering pace, and doubled up his currency positions? He'd probably have been up 300% by now.

what if he'd held his nerve on some of his earlier calls, rather than chickening out at the first sign of trouble - for had he held the original short GBP/USD position at a mere £1 a point from 19995 or thereabouts he would be £600 better off by now. As for EUR/USD, well...from 15700 to here would be a total monster.

It's not been comfortable - when this happens:
















or this happens and you're on the wrong side of the trade (Flash was on the right side, being short EUR/JPY, but got the shock of his life, having just doubled up on short AUD/USD when this happened - however he recovered his composure and held it together...).




















And if the markets do manage a sustainable bounce (hence being long of both FTSE and Dow - positions which he doubled up this morning, and added an S and P long) then Flash sees no reason for these macro trends to continue on the back of a downward adjustment in commodity prices as the developed world heads if not for outright recession, at least a considerable slow-down. And a slowdown, in Flash's book at least = reduced demand, reduced consumption and some cooling in the commodities bubble. Add to that a general drive for energy efficiency/waste reduction and you have a considerable challenge for the commodity bulls. Hence Gold's spectacular fall from grace. And if some of the hot money comes out of oil the test for it will come at around 100 a barrel, where Flash's guess is that there will be a pile of hedging and it might signal a bit of a leg back up for commodities. That's the point he will close down all but a small short gold position. But the dollar's rise will take some of the pressure out of the oil price too.

Shares going remarkably well too. Currently Flash is long of Workspace Group, Lonrho and Tribal (all making a comeback?); Woolworths (up 15% in the last two days!); Intel (a big winner over the last couple of weeks); Kingfisher (a play on some recovery in retail and a bottoming out of the property market?) - up from 119 to around 132 in a couple of weeks); Barclays from 261 (this has been a monster); BA - up around 30%; D1 Oils - has doubled from Flash's entry point of 17p. Plus the two Powershares Global Water and Water Resources ETFs.

The wobbly shares - Crocs (what was he thinking?); Axeon Holdings; Blacks Leisure Group; Man Group (has ridden out the dips well but is now dipping just as the rest of the market seems to be recovering); BT; Stanelco.

The plan is to hold just like this; and to ride this out. It's a big adjustment - especially in currencies - and if the euro goes, his guess is that it will go in style, all the way back down to dollar parity or thereabouts. And that would signal a complete realignment - but that's about right given how bad the economic news coming out of europe is at the moment.

Drawdowns and margins

Another day, another set of small drawdowns, brought on by the usual cardinal sin of adding too many positions with not enough margin. When will Flash Rabbit ever learn to hold his bets for long enough to allow them to do their work, and give them enough leeway not to get killed by turbulence? Getting spooked by the dow is one thing but the basic view remains correct - short gold (more success), long USD against EUR, GBP, NZD and AUD, and long the various equities detailed below. EUR/JPY short and NZD/JPY shorts both stopped out today - the former for a moderate profit and the latter for a moderate loss - but they'll get reinstated in the fullness of time.

I love you just the way you are

Flash Rabbit has done absolutely nothing today. Niente. Nada. All positions completely unchanged, payroll jitters and GM's gorefest notwithstanding. And it's paid off beautifully so far. He's refusing to be punked by the volatility and is holding his view. So far up £200 since yesterday. Not bad for no work.

Actually that's a small lie. He added a sneaky NZD/JPY short in the middle of the night, and doubled up on his NZD/USD short. Those and short Gold, short EUR/JPY, have been his best trades ever this year. And he's moved the stops so he can't lose any money. Pretty simple.

The plan is to hold this view, wait and see.

Chopped by the changes

Well, the headline trades - short gold from 977 and long Dow from 11180 are still firmly in the money, but under the surface of this apparently smart profit Flash has been burning cash, chopping and changing way too much.

The last 24 hours have been an object lesson in bad risk management and over-trading. If Flash hadn't been greedily moving stops and merrily adding long equity positions, nicked from his margin, thinking how smart he was and how right he was, he would have about 10% more of his meagre fund still in play rather than giving it up to the gods of market arrogance. A few lessons to remember:

- run smaller positions over longer time frames - i.e. had he not taken profit on a good chunk of the gold position when it hit 926 earlier in the week, and opened up new ones from the 920s, which he left open smugly thinking it would go down in a straight line, only to have them smashed to bits when the market went into cataclysm mode, then he would have a chunk more cash by now.

- don't try to second guess the market. watch, observe, set a predetermined entry point and then act if the conditions look right. Trying to put a covering short early evening on Weds on the Dow at 11480 (roughly today's pivot point) proved to be a total disaster because Flash hadn't put the margin in place. With a big margin it could have been a good little trade - partly because Flash had at the back of his mind that the Dow was getting a little overbought given how awful some of the data is - but instead it just lurched into profit, out of profit, and then got stopped out for a loss before the whole edifice came whizzing down in seconds at 1.30. And then to cap it all Flash decided, late on in the morning, that he'd not made enough cash (as if 20% up in 2 days wasn't enough) added another Dow long from 15600, and that got killed in seconds as well. Stupid. Poor judgement.

- stick to your guns if the trades are going well, even if the market suddenly moves. With the canyon in the dollar brought on by what Flash thought was a wild over-reaction to - by recent standards - some fairly modest figures - (omens of things to come tomorrow?) it was inevitable that the GBP/USD position and the EUR/USD positions were going to get taken out by stops, for the sake of preserving capital, but Flash went into full blown panic mode and shut down his very profitable AUS/USD and EUR/JPY shorts. He's back in them now but at the cost of the spread and with a much reduced margin for spikes, having been caned by the volatilty. EUR/JPY hardly moved at 1.30 but flash took out his fantastic short from 16900 - a complete over-reaction. It's back in now but from 16866 - not nearly such a good level..

None of this helped by the fact that the SB company servers were overloaded, the connection was ropey (Kids downloading Dr Who on the iPlayer next door) so everything looked and felt like a slow motion car crash for a while. Rank amateur, crap trading.

However, the shares are, for now, nearly all doing fairly well. D1 Oils sprang into life today on positive cash forecasts and better focus, BA has been a dream (however, results tomorrow may cause some wobbles), Barclays is behaving itself and even Crocs hardly moved downwards amidst the volatility. Flash can't help thinking that this afternoon's sell off was a ludicrous over-reaction - he understands profit taking but this was a herd of crazy bears. On what basis? The crack pipe of short equities, long commodities? As Macro Trader says - a classic case of lurching between disinflation and inflationary bust.

And all the while the dollar was strengthening and oil was coming back down. So what the hell was going on is completely beyond him.

Flash has cut the Ford long as it's just too much effort. Likewise UAL Corp. In their place he has discovered two ETFs that he's taken out a long position in - the PowerShares Global Water Portfolio and the PowerShares Water Resources Portfolio. Both showing a modest profit in 2 days.

He's planning to leave everything alone as much as possible tomorrow, go out, and let things work through - that's what stops are for, isn't it?