SEC Halts Short-Selling of Financial Stocks: NOT!
There is a general consensus that there is a total ban on shorting stocks within the financial sector. Not true. Rather, it is a selective list that has a good amount of companies named, but why are these names excluded?
The SEC today announced a temporary and emergency action to halt the short-selling of financial stocks to “protect the integrity and quality of the securities market and strengthen investor confidence.” The United Kingdom’s regulatory body took similar actions yesterday.
The order follows extreme turmoil in the financial markets, with some believing the short-selling of financial institutions sparked a self-fulfilling prophecy, playing a role in the collapse and near collapse of several companies. As shorts drive the price of a stock down, it creates a decline in market confidence which can cause customers to pull funds out of the financial institution and counterparties to stop trading with the institution.
The SEC feels that recent short-selling has driven financial stocks prices unrelated to their true price.
The action covers 799 financial institutions, effective Sept. 19, 2008 and will end Oct. 2, 2008. The SEC may extend the plan longer, but will not extend it longer than 30 calendar days.
We put together a list of the other few hundred that did not make the list. See below (.xls File).
A few items of interest included in spreadsheet:
- The open from last Friday (9/19) is listed as the potential short term resistance.
- Recent high and lows that may be used for additional support and resistance levels.
- Days to cover
- Short Interest
UPDATE: As soon as this was published ( within seconds actually), the NYSE added names to the list of DO NOT SHORT. So, these seems to be an evolving list that will change at the whim of lobbyists and our esteemed government officials. Here is the link to the NYSE news item that will be changing over time.
SEC info: http://www.sec.gov/news/press/2008/2008-211.htm