NYSE And Nasdaq Propose Another Short-Sell Ban; US Dollar Rises To 16-Month High Versus Euro

Panic and risk avoidance continues to dominate the investing landscape on Friday, resulting in the zigzag rollercoaster ride in the markets. The Dow (^DJI) is losing blood again, despite repeated calls of a market bottom by market analysts and bloggers. The S&P 500 index is posting its biggest ever weekly decline this week. In this climate of high uncertainty, no one really knows anything better than another. People are saying the market should be in a bottom anytime soon, or even now, but yet stocks keep declining. Even in a bear market, prices don’t really dive down in a straight line, but make a series of lower highs and lower lows, so not having done that indicates a high level of fear among investors. The fear gauge - VIX (^VIX) - has shot up to another record high in intraday trading Friday.

Adding to this widespread fear is the realization that rules are constantly changing in the stock trading game. Remember that short-selling ban which was recently imposed then lifted? Well, that may be reinstated again, but under different circumstances. On Friday afternoon, it was reported that NYSE and NASDAQ are seeking a 3-day ban on short-selling of individual stocks should they fall 20% from the prior day.

Desperate times call for desperate measures. How about closing down the global financial markets next? (It was suggested by some politicians but thankfully not considered as a measure). It’s easy to see why many investors are choosing to sit on their hands, instead of picking up falling knives.

US Dollar Rises To 16-Month High Versus Euro

Despite the spillage of red all over the stock markets, opportunities to profit from fear have arisen in the 24-hour forex markets. The feeling of fear and dread once again is helping the US dollar in forex trading; traders are flocking to the greenback as the default safe-haven currency to hold close to their hearts, causing the dollar to rally sharply against other currencies like the Euro, Swiss franc, British pound, Aussie and Kiwi dollar in the last trading day of the week.

The Euro fell to a 16-month low against the US dollar, falling through 1.3400 on Friday in the steepest one-day fall this week. GBP/USD did touch 1.7000 earlier Friday (an expected downside target) and then fell some more to below 1.6800. USD/CHF erased all of its earlier losses from early Friday and tested 1.1400.

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