It's been a while since we've talked about short-selling in this column. So first up this week is

Bob Tomasevich

, who writes: "I've seen newsgroup postings where people say they can short anytime at the ask price. I thought the rule is that an uptick has to occur before you can sell short. If you could short at the ask, then you could short anytime. This doesn't sound right, unless brokers are allowed to do this. I seem to read this more from people who trade at those 'daytrading shops' than normal online brokers."

Another myth bites the dust.

In an effort to keep short-sellers from exacerbating a stock's natural (insofar as markets are subject to natural forces) downward momentum, the

New York Stock Exchange

forbids short sales on stocks whose last trade was lower than the previous trade. However, that rule, widely cited by journalists as an absolute proscription on shorting on a downtick, only applies to NYSE stocks.

Nasdaq National Market

securities are another matter entirely. Take a look at Rule 3350 in the

National Association of Securities Dealers Manual

. This is the Short Sale Rule, and it explicitly allows stock to be sold short after a downtick as long as the sale meets this single criterion: It has to be at least 1/16 above the current inside bid, i.e. the highest bid in that stock's market. Since most Nasdaq stocks are quoted in 1/16 increments, the NASD rule effectively means that stocks can be sold, as your daytrading newsgroup friends put it, "at the ask."

As far as the brokerages are concerned, the NASD exempts market makers from this restriction for what it calls "bona fide market making activity" -- that is, when they're providing liquidity to a market by taking the other side of trades, rather than trading for their own account.

You may or may not be surprised to know even the respectable brokerage houses manage to get on the wrong side of this rather forgiving rule from time to time. Just this past week,

Lehman Brothers

agreed to pay the NASD a $100,000 fine to settle charges that, among other things, it violated the Short Sale Rule 50 times over two weeks. (Note that Lehman neither admitted nor denied the charges.)

Message Center

Memo to

Ole Graa

TheStreet Recommends

, who wonders how to find 20- and 50-day moving averages for stocks: If, like some

technical analysts, you get all nostalgic about the good old days when people weren't completely dependent on computers for every single task they performed, you can calculate moving averages yourself. Adding a stock's last 20 closing prices and dividing by 20 will give you a simple moving average for that period.

If, on the other hand, you're not a Luddite, and you've emailed the MonEmailbag in search of a useful and straight answer, go to


Tools & Quotes section, enter a ticker symbol and click on "Charts." Then click on "Interactive Controls." You'll be greeted by a menu of various chart settings that you can alter to fit your needs. That menu will let you chart your stock against simple or exponential moving averages for any time frame you choose.

Memo to

Anton Outchitel

, who, apropos of

a column two weeks ago on fair value, wonders where on the Web he can find

S&P 500

futures quotations. Look no farther than the

Chicago Mercantile Exchange's

site; it has both

intraday and

after-hours Globex quotes for a range of futures and options contracts, including the S&P 500 futures.

Memo: Have a dumb question relating to finance? Have a problem with something I've written? Send it to, and I'll do my best to answer. Include your full name, and please, no questions seeking personal financial advice or regarding personal brokerage disputes. And this reminder: Because of the volume of mail, personal replies can't be guaranteed.