- Well...they're up to it again. The Securities and Exchange Comission (SEC) is out to "Get Shorty" again.
- Heck, you know they've got to paint the shorts as evil vice the failed companies that are on the road to oblivion (those poor hapless victims like Enron, Worldcom, Bear Sterns, Merrill Lynch, Countrywide, GM, Chrysler, etc, etc, etc).
- Anyway, a little history first. Back in JUL 2007, the SEC removed the uptick rule that had been in existence since the 1930's. This rule required a stock to have an uptick before anyone could sell it which did tend to slow the selling pressures. Well, when that happened I took notice and asked the obvious, "Why are they doing that? And, especially, why are they doing that now after 5 years of an up market and we're at all time high's?" Well, the answer to me was "Da Boyz" had just changed the rules and were getting ready to play a new game. Now , they could just pile on and submerge a stock with continuous selling. And play they did! Da Boyz didn't care about shorts then but....
- So then after the market is getting the crap beat out of it in summer 2008, the SEC institutes the "no short sales on financials" ruling. They were trying to force the shorts to cover and provide upward buying pressure..which didn't really amount to much. And when the final downward drive in October happened, there were no shorts to cover and provide buying pressure so the market just kept falling until people with titanium steel balls (and pockets as deep as the TARP legislation) said enough and stepped up to buy.
- Well, they just passed a new uptick rule this past week. In my opinion it's just for show because of the way it's constructed but....It's still a change so I take notice. Anyway, the rule says no short selling after a stock has gone down 10% in a day. Kind of stupid because who the heck would short it then? Most traders would be hesitant and expecting some sort of reaction / bounce to short instead.
- The only advantage that this might be to Da Boyz is with regard to the leveraged ETF's which could potentially get all jacked up with tracking errors in a short sale limited straight line fall? But the inverse leveraged ETF's would be going upward in value so how would that play out? Don't know...just thinking outta da box.
- The heck with this...it's early Saturday...time to enjoy some weekend!
No comments:
Post a Comment