Stock Market Swoon Sparks Worries of Flash Crash

— -- Stocks took a beating Friday as investors worried over Greece’s ability to pay its debt and possibly exit the Eurozone, China’s change in stock market regulations and disappointing corporate earnings from Amex and General Electric.

The Dow regained some of its earlier losses, but ended the week down Friday 279.67 or 1.5 percent To 17826.10. Here's what weighed on the market:

• GREECE: Creditors are still struggling to come up with a plan to keep Greece from defaulting on its debt and investors fear the country will struggle to make payments to the International Monetary Fund due next month if it fails to reach a deal.

• CHINA’S REGULATION: Another catalyst triggering the sell-off today was stock market regulation from China. After the markets close in Asia, Chinese financial regulators issued warnings about that country's soaring stock market that has more than doubled in the last year. Regulators said they will tighten rules on borrowing to buy stocks.

• BLOOMBERG TERMINAL DOWN: Bloomberg LP's trading terminals, which are used by most of the world's biggest financial firms, went down for a few hours on Friday due to apparent technical problems, prompting the British government to postpone a planned 3 billion-pound ($4.4 billion) debt issue, The Associated Press reported.

WHAT ALL THIS MEANS FOR YOUR 401(K):

After years of rallying it's surprising the nervousness of the market when its faced with bad news.

Sebastien Galy, Sr., FX strategist for Societe Generale points out, “It tells you that once investors are trading and want to get out of their positions they won’t be able to, which could cause a large flash crash.”

The bottom line if your 401(k) or investments are overly extended in risk you should take the time now to pare that back.

Galy says it’s only a matter of time before a major trigger causes a flash crash.

He pointed to Bloomberg terminal trouble as another example of vulnerability in the system.

“Bloomberg crashing today shows, things are not what they used to be, pre-Lehman world. There is a certain degree of nervousness and the ability to trade large amounts is far more limited. The operational and infrastructure is vulnerable.”