Thursday, May 06, 2010

Dow Plunges, Then Regains - What Happened?

The market at one point today dropped below 10,000 on the Dow and was off by about 1,000 point - however it closed off only about 350.....only. The story of the day will not be that the market was off 3% (which is real news), but that the huge drop was just a glitch, or was it.

Right now there are news reports that this was a glitch, an error. Others think a 1987 style programmed trading event occurred. But what if neither is true? Forgive me for sounding like a conspiracy theorist, but what if the plunge happened because things are bad and people began panicking.

Either this was an error or someone stepped into buy to prevent a massive sell off - could it be the rumored Plunge Protection Team? Did the Federal Reserve stop the route by purchasing S & P contracts? If so, nobody wants us to know.

Dow is off about 6.5% from its high.

Scott Dauenhauer CFP, MSFP, AIF