Right in the middle of a continuation rally from yesterday, news about the subprime virus having infected another institution, took the legs right out from under a strong up move and turned it into another down day.
The trigger was American Home Mortgage’s admission that it was unable to borrow or raise money, which pushed its stock down some 90%. All major indexes suffered and our sell stop points have now been brought back into play again.
Only a few of our holdings have dropped to around -7.5% off their highs. I’ll follow the same rule I talked about yesterday in that I will watch market activity tomorrow for a couple of hours. If the markets are trending higher, I will wait another day before executing my stops.
If the trend is lower, I will sell the affected holdings tomorrow.