Financial Short Interest and the SEC

September month-end short interest numbers were released after the close yesterday, and unsurprisingly, the decline in short interest in the Financial sector was huge.  The SEC and Chairman Cox implemented the "No Short" rule to "protect the integrity and quality of the securities market and strengthen investor confidence."  While it was probably wrong to implement the ban in the first place, it's infinitely more wrong to implement the ban and then eliminate it before their goal was attained. 

Over the last few weeks, when the ban was in place, shorts clearly covered as shown in the chart below.  Yesterday, when the "No Short" ban was lifted before the "integrity and quality of the securities market" was protected and "investor confidence" was strengthened, all those shorts that covered were given the all clear to rush back in.  There's rational thought coming from the short community, and irrational thought coming from the SEC.

click to enlarge

Comments

[Inzight:]

Even without legal shorts - there are still bearish ETF's and ultrashort ETF that utilize dark pool equities

It's a market equalizer gone wrong without regulation - now it's so massively complicated there won't eb enough time to get to the bottom of it - let DOW hit 7,000 and have massive panic in the streets, then we'll really be worried

mining101.blogspot.com

2008 Oct 10 01:23 PM

[sumosama:]

what is dark pool equities???

2008 Oct 14 02:13 PM