I think we're about to get a much-needed reminder that stock markets don't always go down.

Could happen today, could happen tomorrow, and it may or may not happen after one last big selloff, but we're going to get a relief rally very soon. I don't expect it to last long, but I do expect it to be rather violent and dramatic. Maybe we get back close to 11,000 on the Dow.

My short-term optimism (and change in opinion) stems from a conversation I had with a hedge fund guy at a conference on Tuesday. He said every hedge fund guy is desperately looking for new stocks to short. 'You can't have enough short ideas," he told me.

It's counter-intuitive, but it's actually good when investors are all bearish because that means there's a lot fewer people with stock they want to sell. (Remember, short selling is a bet against the market in which investors sell borrowed shares of stock in hopes of buying them back at a lower price and pocketing the difference).

It's been especially difficult for hedge funds because the government unwisely banned short-selling in more than 1,000 different stocks (the list was at first 800 stocks, and was supposed to be limited to financial companies, but the list has expanded to the point of ridiculousness both in terms of size and scope).

At first, I thought the short-selling ban was keeping the market unnaturally high, but now I think it may have had the unintended consequences of making things worse. Hedge funds who may have covered their shorts haven't done so because they know they can't put them back on. Some sectors like technology may have been especially hurt as hedge funds looking for shorts have had to target companies outside the financial industry.

So I think the lifting of the short-selling ban Wednesday night could prove to be a catalyst to spark that rally. The Fed could come together with the European Central Bank to lower rates in a coordinated attempt to stimulate the markets.

Again, in the long term, I don't think anything the government does will prevent an extended, deep slowdown, the likes of which we haven't seen for decades, if not generations. The market will probably sink even lower than where it is today.

But at this point, even a short-term rally would be most welcome.