Thursday, August 2, 2007

Hybrid Market Integrity & The No-Uptick Rule

A very interesting "Stop Trading!" segment on CNBC with Cramer this afternoon.

If you missed it, here were a few key comments.

Erin and Jim spoke about the integrity of the market right now.

Cramer said today is "exactly like October 1987" in that you "cannot trust the prices." Cramer claimed that the market was in "incredible disarray" and that he has been "refusing to trust the quotes" and that it has really effected the "homegamers" because they "haven't been able to trust the pricing this week." Bottom line, he claims we couldn't trust the market in February (when the Dow melted due to a computer glitch) and you can't trust it now.

While they didn't mention the hybrid market outright, Cramer has been railing on it lately and I'm sure this is what he was referring to.

Also, and this pertains to some conversations that we've been having at "the Fly's" blog recently concerning the now dead "uptick rule" Cramer claimed that all of the action in BZH yesterday was due to "bear raids." As he explained, "You can drive any stock down because of the no uptick rule." Erin concurred and stated that the no-uptick rule was "causing a lot of the troubles" of the last week.

Interesting stuff indeed. Perhaps Cramer has been reading this blog. I've been all over the "freaky hybrid trades" from the beginning. It's about time it's getting a little more notice from the main stream media.


Michael said...

Eliminating the uptick rule was a logical thing for the SEC to do. The purpose of financial markets is price discovery, and the uptick rule was, if anything, a hindrance to achieving that goal.

With that said, I short stocks regularly, and I love how easy it is to go short on the NYSE now!

Anonymous said...

Michael, while I agree with you in general, what do you make of the 'price discovery' in BZH yesterday? Price discovery meets stock market collusion and manipulation in my mind.

gary said...

I concur with Michael--for too long the NYSE longs have been protected by that stupid rule-granted the stock market is there to protect the longs but it's unfair to be just waiting to short a stock cause of that stupid rule--I've personally watched thick stocks never get filled cause the stop order that you put in is never filled cause there is no uptick for the .10-.20 cents where you want to enter.

Maybe after sometime we can get some character and some confidence into the crooked NYSE market--Nazdaq works fine without that rule so why not NYSE??