Uptick rule

kiefer · Mar 30, 2008

You can't deny that bear raids are a problem for the average long-term investor. Since the uptick was removed, I've seen plenty of instances where a stock was pushed down 10% - 20% over the course of 30 minutes, and then proceeded to rally all the way back up over the next 30 minutes to an hour. All of this on no news. How many long-term investors do you think got stopped out? Who's making money off this? The institutions who are pushing the stocks around. And who's footing the bill? Your average hard-working American. Is it a coincidence that the uptick was removed just before the housing and sub-prime bubbles burst? Of course not! Wall St lobbyists at their finest. And if you think the SEC's test of NYSE stocks with no uptick over the past few years has any merit, you're out of your mind. What's the point of testing something like that in a bull market? That's the dumbest thing I've ever heard!

The uptick definitely served a purpose, and as much as I dislike Cramer, I agree with him on this one. The only people who benefit from the removal of the uptick are hedge funds and the big institutions. They've got the money, and now the freedom, to push stocks around however they see fit.

Triple X · Mar 30, 2008

Quote from 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.

Well, I think the elimination of the uptick rule actually helps small traders deal with program trading. At least MM's don't have to keep upticking stocks every 20 seconds, and moves can be more fluid.

We had the uptick rule in 2001 - 03 and that was very volatile. But in regards to choppy bullshit directionless markets, 2004 - 2006 really sucked ass. The market now is way easier to trade than 2005. But I do agree that directionless chop could kill the market except for algo traders.

Shreddog · Mar 31, 2008

Quote from kiefer:

You can't deny that bear raids are a problem for the average long-term investor. Since the uptick was removed, I've seen plenty of instances where a stock was pushed down 10% - 20% over the course of 30 minutes, and then proceeded to rally all the way back up over the next 30 minutes to an hour. All of this on no news. How many long-term investors do you think got stopped out? Who's making money off this? The institutions who are pushing the stocks around. And who's footing the bill? Your average hard-working American. Is it a coincidence that the uptick was removed just before the housing and sub-prime bubbles burst? Of course not! Wall St lobbyists at their finest. And if you think the SEC's test of NYSE stocks with no uptick over the past few years has any merit, you're out of your mind. What's the point of testing something like that in a bull market? That's the dumbest thing I've ever heard!

The uptick definitely served a purpose, and as much as I dislike Cramer, I agree with him on this one. The only people who benefit from the removal of the uptick are hedge funds and the big institutions. They've got the money, and now the freedom, to push stocks around however they see fit.

Long term investors don't have stop orders sitting in the market. In fact if you were truly an investor you'd know a bargain when you saw one and you'd take advantage of these bouts of insanity rather than complain about them. Mr Market has been crazy lately and made some excellent offers to the willing buyer. It's called price discovery. Without the uptick rule, lower prices are being discovered more efficiently.

I trust you're equally unhappy when your stocks get pushed upward and want a downtick rule as well?

I think what all the whiners forget is all these nefarious shorts hitting the bids have to cover at some point. They are natural buyers and you should be grateful for them.

In my mind, the reason the uptick rule was removed last summer (after a 4 year market upturn no less) was so there'd be a handy scapegoat available to serve up to the general public when the markets did turn down. "If only we brought back the uptick rule, the markets would stop going down...."

piranahfishy · Mar 31, 2008

Quote from kiefer:

You can't deny that bear raids are a problem for the average long-term investor. Since the uptick was removed, I've seen plenty of instances where a stock was pushed down 10% - 20% over the course of 30 minutes, and then proceeded to rally all the way back up over the next 30 minutes to an hour. All of this on no news. How many long-term investors do you think got stopped out? Who's making money off this? The institutions who are pushing the stocks around. And who's footing the bill? Your average hard-working American. Is it a coincidence that the uptick was removed just before the housing and sub-prime bubbles burst? Of course not! Wall St lobbyists at their finest. And if you think the SEC's test of NYSE stocks with no uptick over the past few years has any merit, you're out of your mind. What's the point of testing something like that in a bull market? That's the dumbest thing I've ever heard!

The uptick definitely served a purpose, and as much as I dislike Cramer, I agree with him on this one. The only people who benefit from the removal of the uptick are hedge funds and the big institutions. They've got the money, and now the freedom, to push stocks around however they see fit.

Yes I agree 100%, now it happens almost every day (certainly did last several mos of 2007) stocks on nothing plunge over 5% then rally right back up making a high. Where is the logic in that? A stock drops 5% then goes back up more than 5% all within less than an hour? This type of movement would normally occur over the course of an entire year now it can occur within the first HOUR of trading. The average retail investor 100% will get his stops taken out and end up in a loss for no reason.

I also dislike cramer but I agree with him we should bring the uptick rule back. this guy is right the uptick rule dissapears right before the big implosion of the markets? No coincidence there. I've been trading for years and as Cramer said he never (nor did I) ever really have a problem shorting when the uptick rule existed. I say bring it back as I am for anything that takes the edge off the big institutions which by the way are the same people who are lobbying to bring an end to prop shops.

piranahfishy · Mar 31, 2008

Quote from Triple X:

Well, I think the elimination of the uptick rule actually helps small traders deal with program trading. At least MM's don't have to keep upticking stocks every 20 seconds, and moves can be more fluid.

We had the uptick rule in 2001 - 03 and that was very volatile. But in regards to choppy bullshit directionless markets, 2004 - 2006 really sucked ass. The market now is way easier to trade than 2005. But I do agree that directionless chop could kill the market except for algo traders.

Yes there were times when the market was not so easy to trade as there were no crazy big swings. Up until last July when they eliminated the uptick rule I recall many a slow dull day when there was no movement or volaitlity to trade. But guess what it also meant that you didn't randomly get taken out of long term positions or have your entire portfolio down 5% in one day. Sure maybe there was nothing to trade on days like that but there was also nothing to lose. Markets are anything but more fluid. I think they were more fluid before. The majority of the time we have directionless chop which is done for and benefits the algo trades. Then after HOURS of this the algos will let out a direction and then make a move. Ever notice how all day lnog excpet for the open the market chops and then the last hour chooses a direction. Algos are making multiple volume orders scalping pennies forcing people to buy the Ask to get in or sell the Bid to get out. This is their goal as they play MM and even a Trader gets hosed to retail status.

This will not change, trust me the algos will kill the market into nothing but money being made by bil volume pushing stocks around in directionless chop.

sprstpd · Mar 31, 2008

Quote from piranahfishy:

The average retail investor 100% will get his stops taken out and end up in a loss for no reason.

The average retail investor does not use stops. Cramer doesn't use stops.

I am an individual investor and getting rid of the uptick rule has made my life easier.

sprstpd · Mar 31, 2008

Quote from kiefer:

You can't deny that bear raids are a problem for the average long-term investor. Since the uptick was removed, I've seen plenty of instances where a stock was pushed down 10% - 20% over the course of 30 minutes, and then proceeded to rally all the way back up over the next 30 minutes to an hour. All of this on no news.

Yes, I'm sure this type of manipulation never happened before the uptick rule was repealed.

As has been mentioned before, there were many ways around the uptick rule before it was repealed.

KeithOmalley · Mar 31, 2008

Quote from piranahfishy:

Yes I agree 100%, now it happens almost every day (certainly did last several mos of 2007) stocks on nothing plunge over 5% then rally right back up making a high. Where is the logic in that? A stock drops 5% then goes back up more than 5% all within less than an hour? This type of movement would normally occur over the course of an entire year now it can occur within the first HOUR of trading. The average retail investor 100% will get his stops taken out and end up in a loss for no reason.

you guys know, that for 2 years the sec tested about1/5 of ALL stocks without an uptick rule, when after 2 years there was no diffrence between stocks with an uptick or without, the sec took off the uptick rule. for months everything was fine after the uptick rule was gone.

Now there have been 200 billion of write downs in the biggest bank crisis we have ever seen and probally of trillion dollars of home equity wiped out. DOnt you guys think that might have something to do with the volitility rather then having to wait 1 penny to short a NYSE stock?

Triple X · Mar 31, 2008

Quote from piranahfishy:

But guess what it also meant that you didn't randomly get taken out of long term positions or have your entire portfolio down 5% in one day. Sure maybe there was nothing to trade on days like that but there was also nothing to lose. Markets are anything but more fluid.

I don't make long term investments in stocks. The uptick rule has not hurt traders, end of story.

KeithOmalley · Mar 31, 2008

Quote from Triple X:

I don't make long term investments in stocks. The uptick rule has not hurt traders, end of story.

if anyone cared about traders we would not be any hybird. investors come first