Rumor has it that the reason the futures went lock limit down on Friday was because the massive hedge fund Citadel was going down.
Here is the article from Reuters. It appears that Citadel went to the the government looking for a handout:
"CHICAGO, Oct 25 (Reuters) - Examiners with the Federal Reserve have questioned Wall Street counterparties in recent days about their exposure to debt and other holdings of Citadel Investment Group, the Wall Street Journal reported on Saturday.
The report came a day after Citadel, one of the world's largest hedge funds, said it has more than $10 billion in available credit. The Chicago-based fund was seeking to stop rumors it was liquidating some portfolios after its two main funds had lost 35 percent since January.
Citing people familiar with the matter, the Journal said the Fed had questioned the counterparties in at least two instances.
Talk has swirled in the market that Citadel had asked the U.S. government for a cash injection and that financial regulators were coming to inspect its accounts."
This seems to be the next kaboom in the stock market. I doubt that the Feds will start bailing out hedge funds. The Citadel was leveraged at 10-1. A 35% loss on their equity pretty much tells me they are toast.
Expect a violent market reaction if this turns out to be true.