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Friday, May 7, 2010

8 Theories For Why The Stock Market Plunged Almost 1000 Points In A Matter Of Minutes On May 6th

After many news articles and post sent to me the past year or so. I've come up with my own theory for all this. But, I will leave it at that.
Some of you know the real reasons behind all this.
In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points on Thursday, May 6th before bouncing back to close down 347.80 points.  This represented the biggest intraday decline since 1987.  But what made this crash so absolutely shocking is that it happened in the course of less than an hour. 
Between 2 p.m. and 3 p.m. the Dow lost over 700 points before dramatically bouncing back about 600 points.

So what did happen?

The following are some of the most common theories being put forward to explain what happened....

#1) A Bad Trade

#2) A Computer Glitch

#3) Cascading Stop Losses
#4) Hackers
#5) Cyberterrorism
#6) Fear Of The European Debt Crisis Spreading
#7) Stop Hunting
#8) A Real Panic

When fear grips a market things can go south very, very quickly.  The truth is that markets tend to fall more quickly than they rise, and if a wave of panic starts sweeping over the financial markets we could see things get quite messy in the coming days.

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