So naked short selling has been banned.  I think that this is good news.  I think that prohibitions against naked or uncovered short selling has been on the books since the reforms instituted by Joseph Kennedy, the first head of the SEC.  The SEC issued another regulation on the topic as recently as 2005.  Some claim that naked short selling hasn't been prohibited; at best it fits into a gray area.  If the intent is to drive down the price of the stock, then that action is prohibited.  So it's argued that the naked short selling seen in the case of Lehman, Merrill and more recently Goldman is prohibited.

Whether it's covered or naked short selling, it's a bet that the price of the stock will drop.  When it drops, the seller can buy the shares back at the lower price and profit.

So the problem in many markets is that short selling occurred, naked short selling, as Mark described, at a huge percentage of the float of the company, so the price has to drop under those circumstances.  The bottom line is that if more people are selling than buying, prices drop.  So some people have found a neat way to profit from short selling.  It looks like that the SEC has determined that naked short selling today is being employed to drive down prices.  The market is supposed to be volatile, but if you can short sell most of the float, you're going to drive down the price and you're going to be able to profit.

If naked short selling is now prohibited, then it would appear that people who have sold short (naked) now have to cover their positions. So, I would imagine that for the stocks listed above there are now more buyers and sellers and, in these circumstances, one would expect the price to rise.