The market is worried about a possible failure of AIG — as early as tomorrow morning — said Matt Cheslock, a senior specialist at Cohen Specialists, and traders just don’t want to stick their necks out amid that kind of uncertainty.
“When the Fed came out and said they [AIG] have got to go to alternative sources, that means no one would want to bail out AIG without any backup,” Cheslock said. “If AIG fails tomorrow morning, it’s the same thing written all over this market,” he said. “I don’t think anyone is going to want to take any positions overnight.”
Yikes! Hold on tight.