The unwinding continues---another 50% needed?

Of course the triggering news to today's afternoon sell-off was the collapse of American Home Mortgage, with the stock going from $10.47 to $1.04 after it finally opened. It's done. Six months ago this company was trading at $30 and one month ago at $18, and its top shareholder list was strong. The speed of this reversal is beyond unsettling. Tonight we see news of Bear Stearns needing to halt redemptions in a fund that investors have more or less taken a run at, even though the fund has just one half of one percent of its investments in subprime mortgage securities and it is not leveraged, no debt. That kind of looks like panic, both on the investors' part and on the market's part as there was obviously not the liquidity to soothe the investors fears. What else tonight. Australia's largest securities firm announced that two of its high yield funds are down 25% as a result of the U.S. mortgage market, and that company's stock is getting rattled. And can you believe this? The credit default swap market is now pricing the debt of Merrill, Bear, Goldman, and Lehman at below investment grade, euphemistically called junk by some.

The head of credit strategy at Bank of America, in a written opinion, warned of "an existential crisis for hedge funds". Sartre would have advised yet another 50%, that's 100 proof.

But hold on, this market is oversold already. The fear is almost strong enough for the turn. It just may not be tomorrow.