September 22, 2008

The Ban

It seems to me banning short-selling would only delay the bottoming process if not derail it altogether. One bottoming scenario I can think of is the kind where we stay in a range for a while with false breakouts and false breakdowns and people playing the range. Enough shorts get trapped that a final attempt forces them to cover and spurs a rally that completes the bottoming process. That kind of scenario can't happen if there are no shorts.

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