Tyler Durden says BAC to take a hit

Quote from soccerscott:


However, I do think removing the uptick rule has been negative overall for the markets. As a trader I like no uptick rule. However, as an American I think we should probably put it back in.
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thinking without proof doesn't serve any purpose. why don't you look into it?

"as an American" you must be joking. maybe short selling should be banned altogether. many people say shorting is unamerican. ever hear of pump and dump. if not for the shorts doing the "real" research the crap would even go higher before the inevitable crash. same for the general market as people go into a cycle of euphoria. the professionals on wall street who are in favor of the uptick rule are the market makers and the specialists in the old days who were exempt from the rule. hedge funds were also in favor because they could find a way around the rule and didn't have to worry about the public stepping in front of them or borrowing shares ahead of them.

can you offer any proof that the uptick rule serves a useful purpose?
 
It makes bear raids harder, which should be the case. If an enterprise is destined for bankruptcy the stock will find its way to zero. But if an enterprise is not, it can be forced into an uncomfortable position because bots and short term investors can put it there.

Unfortunately a company's short term stock price is considered a guage for its business viability in the long term.

BAC can become a self fullfilling prophecy even if it doesn't have to be. And as "an American" the country will be much worse off if BAC goes bankrupt because a few hedgefunders got rich shorting the stock and created a panic in the market.

You could say that shorting itself can cause this same issue, but the vast majority of shorting is some kind of hedging. This is desirable because those hedgers provide some cushion to a gapping stock price. As well as help absorb risk from real money investors. This creates stability in the markets.
 
Quote from soccerscott:

I personally don't miss the uptick rule. I remember back in the mid 90's that we would have one of our traders go into the stock we wanted to short and create an uptick (usually only took 100 shares if the volume was fairly low) and then we would hit the bid for 5000 shares.

However, I do think removing the uptick rule has been negative overall for the markets. As a trader I like no uptick rule. However, as an American I think we should probably put it back in.
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We don't have a down tick rule for buying stocks so I never figured what the point was for having an up tick rule for shorting them.
 
Quote from newwurldmn:


BAC can become a self fullfilling prophecy even if it doesn't have to be. And as "an American" the country will be much worse off if BAC goes bankrupt because a few hedgefunders got rich shorting the stock and created a panic in the market.
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BAC won't go bankrupt because of shorters. BAC will only go bankrupt because they have so many dud mortgages and because of lawsuits about the dud mortgages they passed to other parties.

Hedges funds could short Proctor and Gamble down to $20 a share and it wouldn't affect the company one damn bit, because PG makes money every year and has a sound balance sheet. You can't short a company into bankruptcy unless it is already very weak and needs to issue new shares to stay afloat.
 
Quote from rew:

BAC won't go bankrupt because of shorters. BAC will only go bankrupt because they have so many dud mortgages and because of lawsuits about the dud mortgages they passed to other parties.

Hedges funds could short Proctor and Gamble down to $20 a share and it wouldn't affect the company one damn bit, because PG makes money every year and has a sound balance sheet. You can't short a company into bankruptcy unless it is already very weak and needs to issue new shares to stay afloat.
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BAC can go bankrupt if because their stock price is being shorted down others start to pull their money from the company due to this lack of confidence. If this lack of confidence is warranted then eventually it will go bankrupt. But if it's not, the short sellers can force the liquidation.

But the uptick rule is like the limit up/downs and program trading curbs. It's designed to prevent craziness from happening in the markets. If PG should rationally be $20, the markets will send it there regardless of an uptick rule.

The reason they don't have a down tick rule is that the market is fundamentally about being long. It's about company's selling themselves for capital. It's about investors buying company equity so that those company's can use that capital to grow. It's about those investors knowing they aren't stuck with a company just because they bought it on an IPO. All the day trading, statistical arbitrage, high frequency trading, scalping, etc. is just a by product. The only people who benefit from the banishment of the uptick rule were these guys.
 
BAC is somewhat oversold, the last pivot high was on 8-25-11 with a pivot price of 8.80 an avg rang of 6.8% and $0.51. The suggested accumulation prices are buy point #1 is 7.30 buy point #2 is 6.40. Would not touch it.
 
BAC is the govt reach around partner right now. No way they would force BAC in bankruptcy.

Remember BAC did not want Merrill but the govt forced it though.

Looks at the capital trusts of BAC if the smart people were truly worried then those things we be 1/2 of where they are now.
 
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