Look Out Below!

It's times like this that I'm glad to be a day trader. Not that I would have been holding longs overnight if I was still swing trading since all the trends are down. I can't remember the last time I saw futures limit down in the pre-market session. Asia got clocked this morning (Korea -10.6%, Japan -9.6%), Europe's getting clocked now (Germany -9%, UK -7.7%) and our futures are locked limit down at more than 5% and some think they will weaken more once trading opens in Chicago:

U.S. stock index futures tumbled so sharply in European trade on Friday, they had to be frozen at several points in the morning.

By 6:27 a.m. EDT December Dow Jones futures were down 6.2 percent, Standard & Poor's 500 futures were off 6.6 percent and Nasdaq 100 futures were down 6.6 percent.

All three contracts lost the maximum amount permissible before the start of futures trading in the United States.

"We are in a panic mode, I don't know how else to describe it and when you're in panic mode, all rational thought goes out of the window," said City Index chief market strategist Tom Hougaard.

"We've just got to let this thing rage. I think we'll see the Dow below 8,000 today."

According to Reuters data, December S&P futures hit a low of 855.20, while Dow Jones futures touched a low of 8,224 -- the lowest levels at which both contracts could trade in a session.

Jeremy Hughes, a spokesman for the Chicago Mercantile Exchange in London, said both contracts were "limit down."

"The limit is calculated at roughly 5 percent down. At that point it can't go any further down but it is still accessible and can go up again," he said.

"When the U.S. futures open in Chicago, the contract becomes available again, so (it could go) further down another 5 percent down, so 10 percent in total," he added.

A slew of profit warnings from major Asian companies already stripped more than 9 percent of Tokyo's Nikkei, while European equities fell by almost 10 percent at one point to hit their lowest since May 2003.

The MSCI global equities index lost 4.5 percent.

"There will be more margin calls today and something sinister is brewing," City Index's Hougaard said.

In a normal market I'd be licking my chops to do a gap fade at the open. In this market, not so much.

For what it's worth, here are the early gappers. The gap down list could just say "just about everything":

Gapping up: CLS +15.0%, HNSN +10.6%, SYNA +5.6%, HUN +5.0%, DDUP +4.5%, HITT +3.6%, KMP +2.8%, MPWR +1.6%...

Gapping down: DAI -17.0%, ING -16.1%, BCS -16.0%, HBC -15.4%, AIG -13.8%, SAP -13.2%, BP -13.1%, AEG -13.0%, FCX -12.4%, RDS.A -12.3%, SI -12.3%, NOK -11.7%, PHG -11.6%, MS -11.2%, TOT -11.0%, POT -10.9%, RTP -10.8%, VOD -10.7%, BAC -10.7%, C -9.8%, RIMM -9.1%, GS -8.9%, BHP -8.8%, SNY -8.2%, AZN -7.4%, AAPL -7.4%, MSFT -6.9%, GE -6.4%, WOOF -5.6%, POWI -5.4%, ABB -5.2%, JNPR -3.8%

Here's some more on the selloff from Briefing.com:

U.S. equity futures are sharply lower and trading limit down this morning with the S&P futures -60 pts, DJIA futures -550 pts and Nasdaq futures -85 pts. The selloff comes after equity averages plunged around the world overnight, with Asian and European equity indices losing between 6-10%. Regular trading for U.S. futures will resume when U.S. exchanges open for trading at 9:30 E.T. To get an idea of pre-mkt trading while the futures are limit down, we'd note the SPY (S&P 500 SPDR) is currently -6.75% at 85.50 and the QQQQ (Nasdaq Powershares) -6.1% at 28.70. Safe haven assets such as govt bonds are bid up, with the US Treasury 30-year bond touching a record low yield of 3.8676% (according to Bloomberg), although Gold is lower, -$19 at $695.70. Crude oil is lower by $3.90 at ~$64 per barrel, with OPEC cutting production by 1.5 mln barrels per day, largely in line with expectations. There are major currency moves taking place as well, with the Japanese Yen up sharply and the British Pound sharply lower; the US dollar is up vs. the euro... The overnight selloff started in Asia and continued in Europe after the UK posted its first negative GDP figure in 16 years, with Q3 GDP dropping 0.5%. U.S. corporate news is relatively light this morning, although it has been reported that GE plans to use the Fed's new short-term funding facility when it is launched on Monday... Performance among the major foreign markets stacks up as follows: Europe: FTSE (UK) -8.8%, CAC 40 (France) -8.4%, DAX (Germany) -8.6%, OMX (Sweden) -7.8%... Asia: Nikkei (Japan) -9.6%, Hang Seng (Hong Kong) -8.3%, Kospi (South Korea) -10.6%, Shanghai (China) -1.9%.