Friday was options expiration for US stocks and I was watching SLV calls when the Goldman news hit. In case you missed it, the SEC is filing a civil suit against Goldman for misleading investors in subprime-related securities.

There seem to be two schools of thought about this: 1) this is a one-off news event that affects a single company and the market will shrug it off in a day or two, and 2) this will trigger a wave of risk aversion as more suits come to light.

I lean towards the former, though we also have the Greece crisis still brewing away as the IMF flies in to Greece on Wednesday (a meeting that was delayed due to the volcanic ash from Iceland). So it’s possible the dollar and Yen will remain strong until then. It’s interesting that US equities, gold, silver, dollar/Yen, Euro/Yen and GBP/Yen all dropped to support levels in one fell swoop on Friday.  At the very least this is a sign that market participants are still quite sensitive to bad news.

On the other hand, one cannot ignore the fact that Friday was options expiration for April options and that leading up to the announcement risk sentiment was fairly positive. Meaning, it may have been one of those manufactured train wrecks as the floor traders tried to prevent options from expiring in the money.

General equities are touchy as so many expect the rally to come to a screeching halt any day now. But gold is another story. If it was behaving as a safe haven, a fall in equities would not be mirrored in gold. On the other hand, the short position of the bullion banks is at an all-time high and they will jump on any convenient news to drive the price down. These wash-outs are a typical part of gold’s behavior because of that blatant manipulation.

To add to the confusion, the Martin Armstrong prediction of a turn date on April 16, 2010 could be interepreted in two ways: 1) a rally just ended or 2) a decline just ended. One could look at gold’s behavior since last December as a decline. But recently it has been rallying.

The most we can do right now is see how the market behaves over the next couple of days. If the sudden risk aversion is short-lived, we’ll see a snap-back effect pretty soon. If not, be prepared for some more selling.

The decline on Friday achieved a classic Fibonacci retracement of 38.2%, so the worst might be over. Sometimes markets will retrace to the 50% level, so that could be a possible bottom. This could be a buying opportunity, but be cautious.