http://seekingalpha.com/article/203625-what-caused-yesterday-s-crash

There’s all sorts of speculation over what caused the crash yesterday. The answer is simple. Pure unadulterated fear.

Everyone is looking for someone to blame, but we’ve seen this happen in markets for hundreds of years. It happened before there were computers and it now happens that there are computers. Yesterday was a classic fear filled day. We saw huge downside in many debt and forex instruments before the crash and the equity markets were the last to capitulate. The bids fell off the board and the sellers just continued to hit the bids. There might have been some “fat finger” trades or some electronic trading that contributed, but this was primarily fear. Good old fashioned fear. This has always happened in markets and will always happen in markets. It’s as simple as that as far as I’m concerned.

Investors are scared out of their minds as China looks like it is slowing substantially and Greece and the EMU appear to be on the brink. There are real fundamental reasons for the recent declines in stocks. In addition, it’s important to remember that there are a mountain of longs that have piled into the market in recent weeks and months with the expectation of a nice easy recovery trade. That is clearly off the table and there is a huge trade being unwound here. Greed has quickly turned to fear.