SP 500 Plunges To Where The Day The Market Went Nuts And The Forex War

Stocks plunge as fear spikes! Fear? Fear? Fear?

Was there not justifiable reason for the plunge?

Why blame it on fear?

Time to look at the SP Charts.

It's fun.

Wonder what those arrows pointed in the volume bars are suggesting.

Then of course I remembered again the posting More On The Day The Markets Went Nuts? (see also Massive Funds Cashed Out Of Equities ) and the SPY is very close to the lows of that spectacular day.

What does this suggest? I saw Jesse penned some views on it and I am going to paste it here.

• As a reminder, option expiration is tomorrow for stocks, and next week for Comex precious metals options.
  
  Did the Flash Crash probe the way lower? Traders, and I am one, are notoriously superstitious and suspicious about such unexplained movements, suspecting that they are exploratory and will likely be retraced.
  
  
  Well, we're there. Wash and rinse. Wax on, Wax off. Make it on the way up, and on the way down. As long as you are fleecing the sheep. That is how you gain a perfect trading record, if you are dealing the cards, playing with guaranteed house money, and peeking in everyone's hands, if even only by milliseconds before they make their plays. Get them buying hope, and then selling panic. It's all good if you can keep the money moving across your tables.

Well.. how?

And then we have incredible battlefield in the forex last night.

Did you not see?

Look at that beauty.

Frame it up!

Tyler of Zero Hedge sums it up: Breathtaking 250 pip Intraday Move In Euro As Central Banks Try To Kill EUR Shorts, Goldman Loses More Money For Its Clients

• The move in the EUR has just hit ridiculous levels, with the nearly 300 pip intraday move comparable only to the EURCHF surge seen yesterday after quadruple SNB intervention. And frazzled US quants, having no clue what to do, decide to once again turn on the EUR signals pushing the market higher, with a 10% chance of a green close. Make no mistake - this is reciprocal liquidation, where morning margin calls in all other pairs were met by EURUSD covering of shorts, exacerbated massively by what is now almost certain ECB (not SNB) intervention. The negative here is that Germany will look at the Eur response and pitch its naked short ban to all other European countries, which will now gladly accept the proposal, myopically hoping for another 1-2 bp move in the EURUSD. We believe there may well be an announcement of a Europe-wide naked short covering ban this weekend, coupled with the imposition of a transaction tax.

LOL! And yessirme Goldman Sachs again gave bad advice to its clients as mentioned by Tyler.

• Amusingly, Goldman which earlier decided to once again so short the EURUSD has once again lost its clients money even as Goldman adds another day to its Q2 perfect quarter. And while we dont have confirmation on that yet, Goldman's FX desk just closed a trade initiated on May 10 with a stop loss for a 3% loss.

Here is Goldman Sachs words:

• Trade Update: Stopped Out of Long MYR, IDR and PHP vs JPY with a Potential Loss of -3.5% May 20, 2010We were stopped out of our tactical recommendation to be long MYR, IDR and PHP vs the JPY at the London close, with a potential loss of around -3.5%. We entered the trade on May 10th at a level of 100, shortly after the package from the European heads of state was announced. Our recommendation was based on the assumption that the package would assuage the risk jitters in the market stemming from liquidity and solvency fears over Euroland, and that the market would start to trade the macro data once again. In the event, markets have remained more jittery than we had anticipated

My... stopped out of LONG MYR???!!!!!

LONG Malaysian Ringgit????????????