Someone pulled the trigger on closing somebody big yesterday two hours into the bell and then the market settled down in the final hour. Today they’ve matched that pattern exactly, but I doubt we will see much of a settling down. If you have dry powder this is when you deploy, into a crapstorm like this, but the smart money may not want to do that into the weekend. Damn, this is a perfect storm for a bear, which I was one!

Stocks began the day in negative territory but took a sharp dive south in the afternoon as selling built up and some indexes fell through key technical levels, sparking new waves of selling, investors said.

A 20% drop in the Dow would have been needed to halt trading. After 2:30 p.m. EDT, the 20% standard goes into effect. Before then, a 10% drop would have triggered at least a 30-minute halt. For the second quarter, 10% equals a 1,050-point drop in the Dow industrials while 20% equates to 2,150 points.

But none of that caused a near 1000 point drop in the Dow (DIA). The immediate cause was the nosebleed quantity of stop losses waiting just below the S&P 500 (SPX) support line at 1144. When buyers couldn’t hold the line, sellers pushed prices to the stop loss triggers and … SNAP: the volume of sell orders flooded in from hedge funds and institutions with preordained safety against what everyone fears could be an international version of the Bear Stearns-Lehman Brothers film we saw in the US.

The selling was so robotic, at one point blue chip Procter & Gamble (PG) was down 30%!! Now that’s a fire sale dislocation of price and value.

The market whiplashed up to only 350 down before resuming its descent because intraday 9% moves cause casualties i.e. hedge fund liquidations. last I saw, the market traded down to near –500 on the Dow before responding to –400 where it is now.

Error or not, the markets are de-risking and the problem with Greece is creating panic. If anyone has info, send it my way in the comments.

Read more: http://www.creditwritedowns.com/2010/05/what-caused-the-crash.html#ixzz0nBEjDXFD

I get the feeling we just made a boatload of money today. Is this going to be a problem?

P&G calling its intraday plunge an issue with electronic exchanges. Didn’t fall below $56 on nyse trading.

The massive selloff, which began shortly after 2 pm ET, amplified concerns about the spreading European debt crisis as the approval of austerity measures by the Greek Parliament sparked renewed rioting in Athens.

“There is simply a growing recognition that Greece has got to default,” banking analyst Dick Bove told CNBC.com. “The riots in the streets showed the decision to repay the debt was not going to be made by the people in Germany, France and Switzerland—it’s going to be made by people in Greece and they’re not going to repay it.”