18 MAY 2010, Tuesday

• Sooo...now the Germans are banning short selling in an attempt to salvage their markets.  Instead of addressing the root issues.  
• "Get Shorty" all over again.  I will pound this drum forever folks.  The shorts are not the problem.  The problem is the problem.  The shorts merely notice it first and position for it...simple!
• We have seen this play before. It's hopeless.  Politicians cannot battle markets and expect to win. Wage price controls do not work. The Bazooka ploy failed a dozen times, and the ban on short selling financials in the US failed miserably.  Check Fannie Mae chart above.
• All these short sale restrictions are going to do is create a vacuum. Once the shorts are driven out these shares will plunge.  If history is any guide, there will be a brief rally in German banks, followed by a collapse of unknown duration. 
• Politicians are not bigger than the markets, no one is.  However, politicians can and do frequently exaggerate the existing trend. In this case, the trend is down. Short sellers are not the problem, if anything, short sellers are the cure, exposing problems and failed policies that politicians refuse to address.
• Hubris of politicians...“In some ways, it’s a battle of the politicians against the markets” and “I’m determined to win,” Merkel said May 6. “The speculators are our adversaries.”
• Just hope that it doesn't wash up on our shores due to Hedge Funds having to unload leveraged positions in any and all markets jsut to meet margin calls (ie, why the collapse unfolded as it did here in the US in SEP-OCT 2008).
• Dunno...but we'll soon see.
• More downside in SP500 today...below 90dMA...not favorable...getting oversold.  Bounce would not surprise.  If it doesn't bounce soon...could get ugly.
• OK, OK...so let's see here.  Goldman Sachs who has not had a losing day in the past quarter (of which the odds are like you're being struck by lightning...twice...in your lifetime and survivng both) but their 10 Top Trades for 2010 for their clients were 7 losers out of 10.  Hmmm...sorta makes you think...no?