EVERYONE knows the Fed owns the market at the moment. It isn't a free market. If it were the Dow would be below 8,000.
Dude, you got no idea what an important role short selling plays. Wait and see what happens if the SEC keeps this on for too long. If you think the 2000 bubble was big just wait. If they keep this on for months we'll be at 15,000 DOW and the correction will be insane. On the way up you'll place a market order and get hit 4 points higher than the quoted price. Short selling creates liquidity for investors. On the way down you'll crap your pants.
short sellers are the only buyers at bottoms they're the only people who see buy out of fear of protecting a profit
Exactly. They prevent bubbles from happening and provide support on the way back down by covering shorts. If you elimitate them from the market you'll see bubble after bubble after bubble, followed by crash, crash, crash. I can't wait until tomorrow. Just buy the dips. Overbought rallies are sold by yours truly. Not tomorrow. Gidde up!
In my opinion this is a well meant ban. The idiots doing it do honestly think it will help, but as I see it this is kind of like when the close the market down because its come down so much...everyone really throws a shit fit then. We will see. In any case, any rally we get over the next few days will hardly be "real".
The Government has good intentions but if they keep this ban on for any length of time it's going to cause more problems. Numerous studies have been done on bans on short selling in other markets and it has only yielded more volatility and more instability. If the SEC leaves this on for a few days or a week then it shouldn't be an issue. If they leave it on for any longer than that limit down on the futures will be a routine event. The declines are going to be horrific because no shorts will be around to cover into falling prices and the declines will start from elevated prices because shorts aren't around to prevent bubbles. Ahhh....those bastard short sellers aren't so bad after all :eek:
for the last time.. this is a TEMPORARY rule change to prevent the market from feeding on itself... when a co. like Goldman Sachs considers taking themselves private because the selling is just feeding on itself with absolutely no regard for fundamentals which they have a better understanding of than YOU (don't kid yourself guys, you're not that smart, the fibonacci lines don't tell you what the co know) then it's time to stop the bleeding, put a floor in and re-implement the status quo rules when things have calmed.