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Two Ways: Short Sellers Up in Arms Over Uptick


Strengthen your portfolio in good times and bad.

This week the Securities and Exchange Commission will hold a round table discussion on the issue of short selling. The main topic will be whether or not the "Uptick" rule should be reinstated.

According to a Wall Street Journal article, this has upset some of the largest Wall Street firms as a number of them filed letters last week with the SEC objecting the new short selling rules. Under the new "Uptick" rule, traders would only be able to sell a stock short after the price has ticked higher. Advocates of the rule think it would keep Hedge Funds from masterminding "bear raids" that many commentators blamed for the excessive selling during the financial crisis.

While the rule seems fair for most individual investors (and is strangely similar to the rule that was removed in 2007), the larger firms have complained that short sellers provide the needed liquidity for efficient markets.

Bull Pen: Goldman Sachs (GS), which oddly enough does not support the new "Uptick" rule, pulled back for three straight days before moving higher yesterday. Those bullish can buy the stock here and place a stop at $179.50.

Bear Cave: Finding a short is tough in this market, but those who are bearish could consider First Solar (FSLR). The stock could pull back to its 50-DMA around $140. As with all shorts, a tight 2% buy stop should be placed on it.

A Quick Check Around the World

Asian trading closed with the Nikkei 0.91%, India 0.96%, Hang Seng 2.06%, Shanghai -0.33%, and Taiwan 2.00%.

Across the pond, we see the FTSE -0.46%, CAC -0.49%, DAX -0.59%, Swiss Market 0.11%, ATX 0.76%, and Stockholm -0.60%.

Over in commodities, crude oil is trading down -0.53 to 66.31 while gold is down -3.00 to 991.30 this morning.

A quick check of the EUR/USD -.0067 to 1.4554 and the USD/JPY +.38 to 89.98.

Good luck today!

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No positions in stocks mentioned.

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