Short selling uptick rule GONE on July 6th!
Aug 18, 2007 trading
What does this mean? The “uptick rule” refers to an SEC rule created after the stock market crash in 1929, to try to prevent another crash of such magnitude of happening again by reducing downward momentum created by short sellers. The rule states (stated) that you cannot short a stock unless the last price (sale) was higher than the previous price. Since this rule is gone, a trader can now short any shortable stock anytime he/she pleases. Of course, this is going to lead to some volatility in the market, especially in the small/microcap markets. It will also however lead to more profit opportunities during the reaction rallies when all the new short positions are covering.
I bet quite a few people made a lot of money shorting stocks in the last month due to all the interest rate and credit concerns.