Another Wild Ride On Wall Street July 29, 2008 5:30pm by Barry Ritholtz Wow, that was something else! Spread the wealth. twitter facebook linkedin What's been said: Discussions found on the web: RobT commented on Jul 29 That was a bad ride today. I wanna puke. leftback commented on Jul 29 I was long today (apart from some SRS). The former low at SPX 1275 now acts as resistance until proved otherwise. We appear to be churning beneath that level at the moment. Oil inventories might provide an additional boost for stocks tomorrow, oil could melt down from here to USO 90 before finding support. (Apologies to those who don’t believe in TA). I plan to be short again before Thursday’s jobs number, unless there is a decisive move tomorrow through the overhead resistance levels. August might see sideways trading or a weak rally, but I am not expecting a massive sell-off – the next round of earnings reports in October will probably trigger another round of selling – and that may be something approaching capitulation. Gerard commented on Jul 29 Barry, I have a suggestion. You should start posting or have a link that shows the website’s traffic. As you noted before in June or July it is quite accurate at indicating a temporary bottom. Could be interesting and maybe even help some people out… haha. mhm commented on Jul 29 The struts holding the ride… they look like CDOs and my colapse so, no, I won’t ride it. At this point I don’t expect any more surprises: anything goes. esb commented on Jul 29 “Its all about the ‘O’,” oil, that is, black gold, Texas tea. The movement in oil trumps everything right now, and perhaps that is the way it should be al long as WTIC remains above 70. Mich(^IXIC1881) commented on Jul 29 Eeeh, I bought my ticket and ready for the next ride. wtf over commented on Jul 29 The Invisible Hand of the Free Market wtf over commented on Jul 29 The Invisible Hand of the Free Market Nihilism commented on Jul 29 I have a feeling it is the same fake — you can’t short financials — rally probably based on the fact that they will extend the no-shorting rule for 30 days more (unless I am missing something, wasn’t that suppose to end today BR?) Additionally, i doubt it, but fed will try to pull out some more tricks — they will raise discount rate next week (since most dealers have already borrowed $75 B this week and locked in lower rate — if I recollect a headline yesterday) So more technical, fundamental selling pressure on commodities if dollar strengthens….a good possibility based on technicals, and it will shake out weak hands on the commodity side over next month or so. All is well, financials start rallying and in about a months time — they are ready to dump more equity in the markets and then the final reality starts to set in (higher taxes, higher interest rates, left leaning president and — of course the continued slump into housing into 2009). that’s what my hunch tells me…. Mich(^IXIC1881) commented on Jul 29 That was a ridiculous rally today (famous last words), I loaded up on skf and qids just to protest it The Great LIBOR commented on Jul 29 Does anyone else read that cartoon word bubble in their head using the cracking voice of the pubescent teenager from the Simpsons? I can’t read it any other way. Richard commented on Jul 29 another good rally taking us to 11600-11700 and i’m selling into it. i expect we’ll test the recent DOW lows within 6-9 months as the deteriorating conditions continue. Tom commented on Jul 29 Hey, didn’t you post something a while back about how volatility peaks near a true bottom? Are we there yet? Jim commented on Jul 29 Wonder if this had anything to do with today’s rally? SEC Extends Emergency Short-Sale Order Thru August 12Last update: 7/29/2008 9:27:08 PM By Judith Burns Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)–Emergency restrictions on short-sales in 17 Wall Street firms and housing-finance giants Fannie Mae (FNM) and Freddie Mac (FRE), due to expire just before midnight Tuesday, have been extended through August 12, the Securities and Exchange Commission announced. The SEC issued the emergency order on July 15, citing concerns that rumor-mongering could spark “sudden and excessive fluctuations” in stock prices and disrupt the fair and orderly functioning of U.S. markets. The SEC said once the order expires on August 12, it “will not be further extended.” If regulators want to continue the short-selling restrictions for the stocks, they would need to do so through rulemaking. The lengthy federal rulemaking process could be accelerated by issuing interim final rules that are effective immediately but still subject to public comment and possible revisions in the future. Expanding the restrictions to other stocks could be next. Rob P commented on Jul 29 Credo quia absurdum! jim commented on Jul 29 Credo is est Amerika Dr. Kenneth Noisewater commented on Jul 29 I guess folks will just have to keep sharpening their knives until this short ban extension expires… *scrape* *scrape* *scrape*.. (and I thought it was just naked shorts that were banned?) Jim commented on Jul 29 It gets worse. The rest of the story. SEC appears to be able to continue this rule indefinitely through executive fiat. Expanding the restrictions to other stocks could be next. “That would be a natural follow-on to the emergency action that the commission has already taken,” SEC Chairman Christopher Cox told reporters after a press conference at the Labor Department on Tuesday. According to Cox, “the general approach that the commission will take is to commence notice and comment rulemaking at the earliest possible time to ensure that appropriate protections against illegitimate naked short selling apply generally across the entire market.” The SEC emergency order, which took effect Monday, July 21, applies to Fannie Mae, Freddie Mac, and to 17 publicly-traded Wall Street firms that are primary dealers in U.S. Treasury securities. All 19 firms covered by the order have been given access to borrowing from the Federal Reserve, once reserved for commercial banks. The order requires short-sellers to pre-borrow shares before engaging in short sales of the targeted companies, which Cox has said is aimed at abusive “naked” short sales. In a last-minute change, announced July 18, the SEC excluded market makers in the stocks from the pre-borrowing requirement. Short sellers sell borrowed shares in hopes of replacing the shares later at a lower price. The practice is legal and produces profits when stock prices decline. “Naked” short sellers don’t borrow shares in advance of short sales, and may never intend to borrow them, which can have punishing effects on a stock’s price. While the SEC has tightened rules in recent years to curb naked short selling, it hasn’t previously insisted that shares be borrowed before they are sold short. Cox said the SEC is looking forward to analyzing data on the effect of the temporary restrictions, and has heard that all of its recent actions have “helped to control illegitimate rumor-mongering and other techniques of market manipulation.” In addition to Fannie Mae and Freddie Mac, the stocks covered by the order are: BNP Paribas Securities Corp. (BNPQF, BNPQY), Bank of America Corp. (BAC), Barclays PLC (BCS), Citigroup Inc. (C), Credit Suisse Group (CS), Daiwa Securities Group, Inc. (DSECY), Deutsche Bank Group (DB), Allianz SE (AZ), Goldman Sachs Group Inc. (GS), Lehman Brothers Holdings Inc. (LEH), Merrill Lynch & Co. (MER), Morgan Stanley (MS), Royal Bank ADS (RBS), HSBC Holdings PLC (HBC), JPMorganChase & Co. (JPM), Mizuho Financial Inc., (MFG), and UBS AG (UBS). -By Judith Burns, Dow Jones Newswires, 202-862-6692; Judith.Burns@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today’s most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=ejZJCnpbMw1Qtcv6Qd391A%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones NewswiresJuly 29, 2008 21:24 ET (01:24 GMT) Stuart commented on Jul 30 Today was SEC short squeeze part II. BKX up 8.7% as protection for the fraudulent banksters was extended by another 2 weeks. Can’t win by the current rules, change the rules. TBone Dunpicked commented on Jul 30 Now apparently also covered by the SEC ban on naked short selling are the oil company stocks, ETF’s and ADR’s. The short ban was extended to the oil companies after a late night “chat” between Vice President Dick Cheney and Treasury Secretary Hank Paulson, and seems to have stabilized oil prices at $122/bbl, more than 1000% higher than when Cheney took office in 2000. MISSION ACCOMPLISHED! http://i35.tinypic.com/24cw5jd.jpg + http://i36.tinypic.com/11qtjxx.jpg == http://i36.tinypic.com/opzm0i.jpg Just a lonely old grandmother, living in Dubai on her measly $500M deferred grift. Philippe commented on Jul 30 In vino veritas When looking at the markets loops one may find merit in its erring. Read this next.April 4, 2011 What happens after the rate hikes?September 19, 2010 P.R.I.N.T. Money November 21, 2008 Geithner’s Own Words on Financial Regulation Posted Under Active Management Market History Short Selling Previous Post Actual Merrill CDO Sale: 5.47% on the Dollar Next Post What Vintage Was That?