An "uptick" is any sale ABOVE THE CURRENT NATIONAL BEST BID - thus any ASK which does not cross the market. It does not need to be a price higher than the last sale.
But I do now see that illegally shorting to the bid can drop the price leaving room for a legal short posting of a lower ask.
We still have no evidence that any shorting (exampt or otherwise) was done at the bid.
(Emphasis added.)
Maybe you want to check your dictionary, but mine says that "above" implies "not at, not equal". I.e. shorts must not post into the spread or at the boundary of the current spread. They can post 1 cent above it: $0.01 is the minimum tick on Nasdaq.
I.e. shorts are only able to post above the current bid. If there's buying pressure they have to yield 1 cent by 1 cent and cannot stop it or reverse it, only slow it. If their sell limit order becomes the best bid, they must not increase its size but must post a new one at least $0.01 above the current best bid.
Which is how a rational bearish investor would prefer to reduce their their stake and sell shares.
If the "price" is at 660, and the illegal short sale takes place at $650 that would mean that the bid was at $650. Illegally short selling to the bid creates a down tick and perhaps makes the new bid lower still. It certainly will not raise the bid to $651, but it may allow another short to post a lower ask if the bid did drop. On the other hand if the short seller legally posted a $650.0001 ask such that the spread was $0.0001, chances are someone would fill it and this would be a legal "uptick". Another short seller could then put an ask at $651 and wait for someone to buy it which they could also have done if the other short seller didn't exist.
I've actually seen what looked like sell limit orders posted a full 10 dollars below the national best bid during the infamous -$100 flash-crash from $969.
The mechanics are really simple, and I'm at loss why you don't see it: by posting aggressive limit orders below the best bid, using the unlimited liquidity they have in creating short TSLA shares out of thin air, Nasdaq market makers can
drain and reverse pretty much any buy side liquidity which must have the actual hard cash lined up within 2 days, not "borrowed shares within 13 trading days, otherwise never mind".
Compare the two scenarios:
- Anyone manipulating on the buy side to the tune of 3 million shares bought within a short period of time must line up $2.4b of buying power and $2.4b of cash within two days (T+2).
- Market makers manipulating the price on the short side to the tune of 3 million shares to trigger a flash-crash don't have to line up any additional financial assets, there's literally zero technological limits on creating short shares out of thin air. By being trusted "market makers" Nasdaq grants various large hedge funds all the TSLA-bearish investment banks the privilege to be "TSLA share makers" as well - which ability should in reality rest with Tesla Inc. alone. They can, within a single millisecond, post sell limit orders with huge sizes that no buy side liquidity will resist, and can use an aggressive step-down in the bid to create pretty much any price action they think isn't too blatant. Later on, within 13 trading days, they either must come up with the borrowed shares, or if they close the short position at lower prices and at a profit, they can just forget about it ever having happened, and keep the money they stole from investors.
Yes, it's
that bad, and I fully share
@Hock1's and
@Artful Dodger's concern in this regard.
During the uptick rule it's a tiny bit more difficult to mark down the price: except that market makers can tag their short sales as 'short sale exempt' (they are only benign entities creating liquidity on the market) and can execute them just fine.
@Artful Dodger has correlated a suspicious increase in "exempt" transactions - right when there was a bigger bear raid against Tesla - and 12 trading days later (just a single day before the very lax T+13 deadline passed), as it happens there's another bear raid that allowed them to close those positions at a profit.
And yes, the SEC has all the tools and information at their disposal to trivially prove investigate whether this happened or not, simply by mapping the whole-firm exposure of Nasdaq market makers both in the equities and in the options space. Turns out there's another loophole here: many strategies of being positioned short in derivatives does not mark firms as "short" as per the SEC definition, so they wouldn't even have to be marked as a 'short sale'...
If they gave me access to their systems I could probably figure it out within 24 hours.