FRi. OCT. 10 - Short Selling Ban Hurt Markets

General Motors (GM) yesterday closed at yet another multi-year low, but this one drew even more interest- it turns out that the market capitalization of that once fabled company was higher just before the outset of the Great Crash of 1929 than it was on Thursday October 9, 2008. It is now the 20th largest automobile company by capitalization among the world’s automobile entities. Adding to the fright of not knowing what will happen next is the frenetic action around the stock in recent days; due to the fact that shorting was not allowed on so many companies, one could not hedge anything which ironically made the situation at GM that much more precarious. Here’s another factoid: in the three weeks that the short selling ban was in effect, the S&P 500 plunged a stunning 18%. Yet the stocks in the basket that could not be shorted fell almost 25%! This fishbowl experiment seemed to indicate that although individual stocks can certainly become victims of short selling raids, stocks are going to go to where they are going to go. The fact that the large pool of stocks in the grouping (most of which were financials) fell much more than the relative market over an extended time period shows that the ban really did not have the effect intended. More so, what it did was ironically make things more illiquid. We as day traders simply lightened up on our overall volumes while worrying about whatever rules could be randomly created next. So, watch for volumes to increase over the next few days and weeks no matter the moves as more participants have more action with intra-day moves in many stocks actually MORE volatile because of the uptick in overall pool of players which increases the herds in these moves.

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

DECK- preannounced to upside

Bad-

PL- among the insurance companies destroyed yesterday; looking to short thru 9.25 and/or an A-B-A2 to upside in time

UNM- if market weak, looking to short thru 14 if it opens above there

CHK- if natural gas bounces, would like to buy the thing if it opens down

PTP- closed on its low

LFG- looking to short thru 12.22 if it opens above there and market sells off

BKD- shares of the senior living center company cracked as well…if market stabilizes, would like to buy this A-B-A2 at some point

BX- stunningly breathtaking that this thing is this low…looking to buy this if market bounces…premier name in private equity management

XL- down 50% yesterday; worries over company’s survival

HNT- if market opens higher, looking to short weakness

GGP- if market strong, looking to short thru yesterday’s low

ALL, ACE, PRU- among big insurers very weak yesterday

JEF- if market opens higher and this weakens, short thru 15

MON- was strong all day yesterday until end of day; looking to buy on weakness if market rallies

WFC, JPM, STI, USB, BAC- high quality banks that have been thrashed this week; look for them to show strength if market opens down and rallies

VNO, SPG- among big REIT’s which closed on or near lows

IBM – earnings were good Wednesday night; if market opens down and rallies, looking to buy this as it was strong much of day yesterday




Earnings-

GE .45/47.71B .56/51.29B 2.00/188.01B 1.97/193.17B

HST .28/1.16B .60/1.75B 1.77/5.38B 1.63/5.27B

INFY .55/1.21B .59/1.28B 2.32/5.00B 2.61/5.99B



Good luck today.

http://www.protradingnetwork.com/
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Good luck today.

http://www.protradingnetwork.com/
.