Pre-market today, Youku, the Chinese YouTube and recently-hot IPO, was down more than 10 percent on disappointing results.
But in early trading, the stock was down less than 10 percent, with some wild swings that for a moment (as of this writing) virtually erased all of the day's losses.
Joe Saluzzi, co-head of trading at Themis Trading, tells me he believes Youku shares may have been saved from getting crushed by new SEC Rule 201.
That’s the new short sale rule that went into effect Monday, which bans the shorting of any stock down more than 10 percent from the prior day’s close, unless an order can be executed on an uptick—a price above the current “national best bid.”
The ban remains in effect until the end of the next trading day.
The idea is to avoid big single-day drops, otherwise known as slow bleed, instead of a hemorrhage.
Net effect: Zero.
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