Uptick rule

[HolyGrail]

This whole question on the uptick rule is ridiculous. It was just plain unfair to one side of the market by having it in place.

The price of anything, unless it is regulated, is controlled by supply and demand. To suggest that a former rule would have held the stock price up for goog, or bidu etc is utterly ludicrous.

 

[EdgeHunter]

Quote from Edgehunter:

We still had the uptick rule when the Naz lost 78% from '00-'03.

As usual Gnome, you post a ridiculously good point...

So i am taking credit for posting it...


<img src="http://www.enflow.com/p.gif">

 

[wjk]

Here's an angle on Cramers bitch about volatility and the uptick rule. How many shorts does he crush with his calls that
have stocks gapping up 2,3 and more dollars after the close?
(I used to love shorting those the next morning), but don't think for a moment that I didn't watch his show if I carried a short position into the close, hoping he didn't call it.

I used to get a laugh out of him once and awhile, but after he gave marching orders to flood the SEC about the uptick, I refuse to help give him the ratings. I also lost a lot of respect for him when he cried like a baby begging the fed to keep coming in. I thought the fed's job was bailing the economy, not the markets.

I guess he's had a change of heart since he was in the shorting business himself. Some call it hypocrisy. I'll be using the 3 books I bought in the fireplace next winter.

If I'm in a long, and profits drive down a stock, I get out and take my gains. Same in reverse if I'm short. Why should entering a short be more difficult than entering a long? I disagree with the posters who claim the uptick can be gotten around. It's makes a big diff when time is of the essence. Try and chase a falling stock
with an uptick rule. I missed many a great play in those days. I don't normally agree with gov rules, but this was a good change. Now get rid of the PDT 25k rule.

 

[piranahfishy]

guys the Uptick rule ws eliminated for one reason and one reason only: from lobbying of Wall St. Trading Desks and large Hedge Funds so they can better implement Program Alogrymic Trading. Uptick rule has noting to do with the economy or the value of TGT or GM stock or how many cars people buy. But no uptick rule SEVERELY adds to the market's volatiltiy due to the massive program trades.

Wall St didn't like the uptick rule, not having it means they can maipulate the markets that much more.

The severity and proliferation of Program Trading pretty much means the deathblow to the individual indepent trader. It will only get harder and to make a living at this in 5 years will be next to impossible.

 

[wjk]

Quote from piranahfishy:

The severity and proliferation of Program Trading pretty much means the deathblow to the individual indepent trader. It will only get harder and to make a living at this in 5 years will be next to impossible.

Wouldn't that statement apply more toward investing for a living,
as traders rely on volatility? Big moves in a volatile market are music to traders, long and short.

 

[ssbc19]

Quote from HedgefundTrader2:

But these companies are target for short sellers and hedge fund and bear raids because these stocks were 750 and 400 at the start of this and there was lot more potential to drive it down than say a stock like HD valued at 28...

Its the numbers that were targeted not companies. People won't short a $10 stock as they would a $400 stock. Uptick rule would have prevented at least 1/2 the damage.

Here's the little comment that sticks out

there was a lot more potential to drive it down

No uptick rule wasn't the reason google got sold off so badly. The reason, as you said, was because there was a lot of potential to drive it down.

Between 8/16 and 11/6 the stock went up nearly 50%.

This is just my guess, but I think it sold off because the market sucks and it was massively over-bought.

But maybe you're right, maybe if there was the uptick a crowd of buyers would have just stepped in during the Jan. sell-off to buy at 588. Even though support from August was around 480.

Yeah....

And also

People won't short a $10 stock as they would a $400 stock.

What? You do realize what percentages are, right? For instance, you would make the same amount of money shorting a $400 stock to $200 as you would selling a $10 stock to $5.

 

[sprstpd]

Quote from ssbc19:

What? You do realize what percentages are, right? For instance, you would make the same amount of money shorting a $400 stock to $200 as you would selling a $10 stock to $5.

You make way too much sense to be posting here.

 

[Deebee230]

Quote from HedgefundTrader2:

You value a company based on EPS growth and SALES growth and not on a website. GOOG and BIDU pull in tremendous revenues worldwide and nice clean strong balance sheets.

Those are not the only criteria used to value a company, especially an advertising company.

But these companies are target for short sellers and hedge fund and bear raids because these stocks were 750 and 400 at the start of this and there was lot more potential to drive it down than say a stock like HD valued at 28...

This makes no sense. If you were shorting $20m in stock, you could sit on the offer of C all day long and short just under a million or short 28,000 shares of GOOG. I will take the short in the stock with huge volume and lower beta rather than the volatile stock that has been an outperformer.

Its the numbers that were targeted not companies. People won't short a $10 stock as they would a $400 stock. Uptick rule would have prevented at least 1/2 the damage.

The difference is that you would not have as many Dow up 400 point short squeeze days. The index futures (which do not require an uptick) lead the stocks anyways and as it was said before, there was no uptick inplace on a lot of stocks. You could short MS, GS, and BSC all day long without an uptick before, just as you could with Nas stocks.

 

[zdreg]

this is an old story. cramer and najarian and other "professionals" do not believe in a level playing field. they were able to get around the uptick rule when it existed and resent that the public and smaller hedge funds and non members of the exchange are able to step in front of them when entering orders. they believe that unfettered short selling should be reserved for the privileged few. it is an old tale of human nature.

 

[piranahfishy]

yes it does mean the deathblow for people investing the Program Trading. No question about that. But the Program Trading is not primarily the big voltatile swings but the cause for choppy directionless markets as this is where the program trades make most thier $$.

I hate to say it but in 5 years (if not sooner) what we are all doing and attempting to do (daytrading etc) will be beyond obsolete.