June 26, 2017

1932 Ban On Short Sales

As always, Jason Goepfert of Sentimentrader has provided us with more insightful charts. he was kind enough to allow me to publish his latest chart along with some of his insightful commentary. I think you will find the information below extremely enlightening. Jason offers a service that is second to none. Give it a try!

Ban on Short Selling

Feb 15, 1932

COMPTON ATTACKS ‘FALSE’ SHORT SALES

Deals for Next Day’s Delivery Are Unfair.

Feb 18

CALLS ‘BEARS’ PERIL TO RECONSTRUCTION

W.R. Perkins Tells Senators Gravest Menace to Congress’s Steps Lies in Short Selling.

CHARGE HIRED PROPAGANDA

Rumors, True or False, Are Spread, He Says — Dr. S.S. Huebner Defends ‘Stabilizing’ Practice.

Feb 19

NEW EXCHANGE RULE PUTS DRASTIC CURB UPON SHORT SELLING

After April 1 Brokers Must Obtain Written Consent From Clients to Lend Stock.

END OF BIG BEARS IS SEEN

Market Rallies on Advance Rumors — Orders Sent to Coast After Close Here.

BAN HAILED IN CAPITAL

But Members of Congress Disagree on Whether It Will Head Off Legislation.

NEW EXCHANGE RULE CURBS SHORT SALES

In the most drastic reform introduced since the country-wide controversy over short selling began, the New York Stock Exchange announced yesterday that, beginning April 1, its member firms would be required tc obtain the express consent of customers before their stock could be lent to protect commitments on the down side of the market.

Feb 19

ACTION BY EXCHANGE GOOD, SENATORS SAY

But Disagree on Whether Curb on Short Sales Will Head Off Legislation.

SOME FOR CONGRESS BAN

Capper Believes Restrictions on Bears Were Prompted by Fear of Inquiry.

Feb 20

HOOVER REVEALS HE DEMANDED CURB ON SHORT SELLING

President Warned Exchange Heads They Must Adequately Protect Investors.

SEES RECOVERY RETARDED

Legislation With Administration Backing Is Hinted if Regulation Here Fails.

ACTION IN SENATE URGED Report on Regulatory Bills Is Asked — House Hearing Evokes Diverse Views.  President Hoover in a statement today condemned short selling for speculative profit on the New York Stock Exchange and said that he and other administration officials had frequently expressed the view to managers of the Exchange that measures should be taken to protect investors from “artificial depression” of the prices of securities they hold.

March 21

To the Editor of The New York Times: Short sales of stock are an almost unmitigated evil, and if Congress can devise means to limit or perhaps eliminate the practice altogether, it will have taken a long step forward in preventing such disaster as almost overwhelmed that portion of the public which endeavors to save and invest some portion of its income and for a time threatened to overturn our entire financial system last December.

April 10

GET DATA FOR SENATORS

Brokers Comply With Exchange Request for Full Reports on All Short Sales.

With stocks rallying moderately as uneasy speculators covered their short commitments, the New York Stock Exchange proceeded yesterday with feverish haste to assemble the vast amount of statistical evidence which Richard Whitney, its president, has been directed to produce at the opening tomorrow in Washington of the Senate Banking and Currency Committee’s market investigation.

The Strategies

As for our options strategies, well, if all goes well over the next few days we could witness our first signal in the ETF Extremes in over a month and our second signal in the last two weeks in the Sector ETF Extremes. Furthermore,  with QQQQ closing near the lows of the day we could also see a Gap Fade opportunity tomorrow as well. three trades in one day? It is quite possible.

The Sectors that I am watching closely are the retail sector (RTH), health care (XLV) and consumer discretionary (XLV). All three have moved into a short-term oversold state that my initial screen has been triggered. Now on to my proprietary measures for the final decision.

Overbought-Oversold levels for September 23, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 39.6 (neutral)
* Dow Jones (DIA) – 39.2 (neutral)
* Russell 2000 (IWM) – 46.4 (neutral)
* NASDAQ 100 (QQQQ) – 34.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 36.7 (neutral)
* Consumer Discretionary (XLY) – 29.2 (oversold)
* Health Care (XLV) – 23.4 (oversold)
* Financial (XLF) – 49.1 (neutral)
* Energy (XLE) – 32.0 (neutral)
* Industrial (XLI) – 49.4 (neutral)
* Materials (XLB) – 43.1 (neutral)
* Real Estate (IYR) – 43.2 (neutral)
* Retail (RTH) – 26.3 (oversold)
* Utilities (XLU) – 37.5 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies. Remember, this is a marathon and not a sprint.