It was in March 1938 that the uptick rule — requiring that a short sale be made only at a price "higher than the last different price" — was first established.
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We also hope that the market's reaction is similar to that after the original rule was set. After undercutting 100 on March 31, 1938, the Dow industrial average shot up 50% in four months. Yesterday's 390-point rally, with the uptick-rule news getting at least some of the credit, looked like a pretty good start.
Yesterday's good news no doubt was a combination of Citigroup's profit and this. While many in the financial industry don't seem to think the uptick rule will help any; some do, but none think it will hurt. Studying panics of the past, it's usually about confidence. As much as we all like Obama, all the verbal attacks on Wall Street makes it nervous. A nervous Wall Street means prices going down. A little confidence will go a long way, and I'm hopeful for the best.
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