First published March 16, 2008 under: Here’s why everything is hitting the fan at the same time.
Here's the original post.
After safely protecting investors for over six decades, a little known SEC rule was quietly removed on July 6, 2007.
With the removal of this rule all the rules of trading and investing in the market went out the window.
One of the reasons for the market's current volatility is a direct result of this rule change.
This major SEC rule was designed to protect investors.
With the removal of this rule, professional traders and hedge funds will be able to suck money out of the market and your portfolio in no time flat.
Why this rule that has stood the test of time since 1938 and was put in place to protect investors was removed is a big mystery.
Why now?
Here's what I suspect happened... some large hedge funds got together and lobbied to have this major trading rule removed.
It's just that simple. Why else would the SEC act out of the blue and remove this very important investor safe guard?
I suspect with this rule change the hedge funds have just been given the keys to Fort Knox.
I made this video last year but it details how this new ruling will effect you. The video explains in every day language what you can do to protect your capital from the hedge fund gunslingers and professional traders.
Watch the video as my guest. No registration required.
After you view the video you will have the knowledge on how to protect your portfolio, while at the same time reducing your risk exposure.
Adam Hewison
President INO.com
In 2007, the markets were so bullish and probably nobody paid much attention to the removal of the Uptick rule. By now, everyone knew 2007 was the top of the bull market. Isn't it time to rectify the mistake?
What good are stops when your stock in pre-market is shorted on light volume and you gap down 10-15%? I have experienced this too many times lately, I set my stops and the stock gaps down 2-3 times more while the shorts keep it down. The SEC seems to have no clue what they have done. Any large trader/program can short enough stock and attract the momentum to pump up the premiums for their writing puts, and they will be glad to cover before options expire to make the puts they sold worthless.
You are right. The SEC has no clue. You have described exactly how the markets are working RIGHT NOW!!!
Adam
Ok, it was only on certain stocks:
In July 2008, the SEC announced emergency actions to limit the naked short selling of government sponsored enterprises (GSEs), such as Fannie Mae and Freddie Mac in an effort to limit market volatility of financial stocks
Ithought that youhave now to have the stock BEFORE you can short a stock?????
Maybe this is teh reason why the uptick is no longer needed?
Yes, I remember this
I have NEVER been able to understand why the SEC chaned this rule so sneakily
Now the hedgefunds can disgorge the little guy
Keep fighting for its re-instatement!!
Great insightful comentary!!! WEW