No time to celebrate

Yeah, yeah, the Dow was up 379 points, to 6926, but perhaps the more significant news came from Barney Frank, who said he expects the "uptick rule" to be restored in about a month. This is not some magic elixir, mind you, but it might restore a little more interest in stocks – not to mention a little less volatility. Under this long-standing requirement, which was dropped in the summer of 2007, investors wanting to sell short had to wait until a company’s stock rose. Sounds byzantine, but the elimination of the uptick rule has been cited as having exacerbated the market's downward ways. From Tom Petruno at Money & Co.:

The idea is to prevent a cascading effect by short sellers that can drive a stock mercilessly lower. In a short sale, a trader borrows stock and sells it, in anticipation of falling prices. If the bet is correct, the trader can repurchase new shares later at a lower price to repay the loaned shares, pocketing the difference between the sale price and the repurchase price. The SEC got rid of the rule in 2007 after finding that the restriction hurt liquidity in the market (by keeping some traders away) and wasn’t necessary to prevent manipulation of stocks. Plus, with decimal pricing of stocks, an uptick is just a one-cent move.

As for today's big gain, all I can say is be afraid - be very afraid that a brief run-up will lead to an even bigger sell-off. That's right - there's the belief that stocks could be in worse shape after all the profits are taken.