7/21T12:55 Privateer

One of the first things that the SEC did when it was brought into being by the Roosevelt Administration in the 1930s was to put a curb on short selling. At that time, the rule introduced was that a stock could not be shorted unless its last price movement had been upward. This became known as the “uptick rule” and was only rescinded last year. The first result of this new “regulation” was the market smash up of 1937 which was much more abrupt than its precursor in 1928-32. In any market, a short interest cushions abrupt falls because shorts are “captive buyers” - they must buy to take their profits. Remove them and their potential buying is no longer there. As a result, market declines become steeper and bottoms lower.