[Minetoo]

Unless you are in your 90's, no one on these boards has ever traded without this rule in place. Consequently, how could we possibly conclude its impact with such a microscopically small sample period?
Do not confuse a contributing factor with a cause.

Originally Posted by Minetoo »

Unless you are in your 90's, no one on these boards has ever traded without this rule in place. Consequently, how could we possibly conclude its impact with such a microscopically small sample period?
Do not confuse a contributing factor with a cause.

You only have to compare the $TICK levels above +1000 before and after the uptick rule was removed to recognize the impact.

Since this is Dr. Janice's thread, I'd like to hear her seasoned perspective on all of this.

[thetradingdoctor]

I agree with Cooter's take on this, esp as regards the $TICK levels. How often are you seeing $TICK above 1000 since the short-selling rule was abolished? How often did you see it before? In addition to the state of confusion re: subprime mess, lack of transparency, lack of confidence and illiquidity in the bond markets---the "Bye Bye to Short Selling Tick Test" appears to be affecting market volatility in a significant manner. These markets are more deceptive than ever. I just sent out a "Little Shop Of Horrors" Alert. We are in no-man's land right now, waiting for the next pearl to drop from the lips of the almighty Fed. No matter what you think about the Fed, don't fight them. And- get used to the volatility, as it is likely to be around for some time. It is the absence of the short selling tick test plus the number of uncertain factors plaguing these markets at this time that will contribute to and continue this volatilty. There may be hope for reprieve from it in mid-Sept, but I wouldn't bet money on it right now. For market history buffs, the pattern of the DJIA in 2007 most closely resembles that of1946.

Thanks!

Doctor Janice

[Jakew]

That may partly explain why in July '07 a record high - for years - short sold stocks number has been recorded. Some misquided market analysts expected another bull rally following such a display of pessimism.

A big change in my opinion - aren't markets driven by (unreasonable and reasonable) perceptions?

[thetradingdoctor]

It is a general axiom in the markets that perception trumps reality. As we all know, both are relative and, thus, can be reasonable or unreasonable---it just depends on who you/what/where you are.

Thanks!

Doctor Jance

[The Bear]

Doc i finally read this article. Here's my comments:

>I cannot see how that does not cause more volatility

This is purely an opinion piece. This person has ZERO DATA to back up their conclusions.

>This will make the price become oversold to a point where value investors step >in and cause the stock to whip back up. The whip back up will be exaggerated >due to the fact that short-sellers now need to cover and buy at any price.

This WILL do that, and this WILL happen. Unless you have access to the data that matters, it's impossible to come to these conclusions, even by looking at the TICK. I've been watching the TICK and the DOW for some time before the removal of the rule....and I've witnessed many 1000 readings.

>The specialist and market makers have a new dynamic to contend with now >after the rule change. Before, they could see short sellers in their book >waiting for up-ticks to be executed.

Exactly, they have some advantage here, and now it's been taken away from them for the better. Additionally all this talk about Specialist is sort of dated. The specialist system is slowly diminishing. The NYSE Hybrid system pretty much killed most of them. The floor is a very sleepy place these days, simply because they can't make as much money anymore.

I personally would be OK to see all of them removed and just have IT guys operating the systems. I can't say for sure that they would have an advantage over a small speculator like me, because I have no data to back it up, but removing all of them LIKELY couldn't hurt me in any way.

They had a reporter on CNBC trying to justify their staying there, as they were blaming John Thain or someone (one of the execs) for killing them. Their claim is that, when the bear raid starts, it would be that much worse if they weren't there. To me it sounds like a poor attempt to justify themselves.