Remember the sickening plunge in the stock market last spring, May 6, 2010, the mysterious flash crash?

Remember that day? It felt like the markets were in a massive power blackout.

Can it happen again? What are the Black Swan events of 2011, the unpredictable events that can wreak utter chaos in the markets? 

On that day last spring, protests in the streets of Greece were just aborning over fiscal austerity measures proposed by the government to rein in its debt crisis. As students winged oranges and bottles at cops, the markets here plunged a chilling 300 points plus by 2:42 p.m.

I was on set at the time on Fox Business covering the plunge. What happened next was terrifying. It reminded me of the 1987 crash, back when I was at Money Magazine. That was scary, too.

After 2:42 pm, the Dow Jones Industrial Average began to unravel, a gut-clenching plunge, falling more than 600 points in the span of 5 minutes. In just the span of a long commercial break, the Dow was down nearly 1000 points.

But less than half hour later, by 3:07 pm, the market had careened higher, in a head-swiveling Evel Knievel swerve where it recouped almost all of the 600 point drop.

But can it happen again?

Answer: A plunge could happen, but not with the terrifying speed of the flash crash, due to market reforms enacted since. 

But at the same time, the market sure feels a bit toppy now as it skates along on very thin and brittle volume, the blue sky crowd and the rainbow spotters perhaps too much in control, ignoring any bad news. Like California or Illinois one day getting locked out of the muni bond market, and having to get a temporary loan from the U.S. Treasury or the Federal Reserve via the federal home loan bank system.  

Instead, lots of glowing bubbly talk about tech IPOs, the coming AIG IPO; how market volatility is dwindling down to the level of dust mites; Fitty Cent pumping up the volume on Twitter with tweet touts telling followers to buy a penny stock he owns a big stake in, but not telling them that it doesn't have a drop of money to its name, reaping at least a $5 million paper profit in the process. 

Mood elevators being the after effect of the monetary steroids the Federal Reserve has pumped into the market. 

So more importantly, what are the 2011 Black Swan events that could trigger a plunge, like the flash crash of May 2010?

The Securities and Exchange Commission, along with the Commodities Futures Trading Commission, spent five months investigating the flash crash. Congress held hearings, a joint report from the two market regulators was then issued. Bottom line: The events belied a market that was so brittle,  "a market so fragmented and fragile, a single large trade could send stocks into a sudden spiral.”

A large mutual fund firm had dumped a big block, $4.1 billion worth, of E-Mini S&P 500 contracts, about 75,000 contracts. With the pool of available buyers drying up in minutes,  high-frequency traders who can make trades a fraction of the time of it takes you to blink your eyes started doing attack selling, blowing the effect of the mutual fund's out of proportion and fueling the dramatic price declines of that terrible day.

Last September 10, the SEC passed new rules backed by the stock exchanges and other market regulators to expand a circuit breaker program that it had earlier installed, this time to include all stocks in the Russell 1000 Index and certain exchange-traded funds. The circuit breakers would stop trading for five minutes on these stocks if they rise or fall more than 10% in a five minute period.

Economist Ed Yardeni has a list of what he says are the Black Swans events that could happen in 2011. Yardeni remains a cautious bull, he has “a 70% subjective probability” to his bullish forecast, and 30% to bearish alternatives. Here is Yardeni’s surprising take on the 2011 black swan events—I cede the floor to him:

(1)   Inflation heats up, especially in emerging economies, where the majority of consumer budgets are spent on food and fuel. The UN’s Food and Agricultural Organization is warning of a “food price shock” after its benchmark index of farm commodity prices shot up to a new record high last week. Similarly, the International Energy Agency is warning that oil prices “are entering the danger zone for the global economy.” Rising food prices have provoked riots in Algeria. Pakistan’s shaky government reversed a recent fuel price rise despite criticism from the IMF. Indians are crying over soaring onion prices, which have led to an 18% year-to-year increase in food prices. Higher food and fuel prices reduce the purchasing power of the "Have Nots" in emerging economies. This increases the likelihood of social and political unrest. In the emerging economies, central banks must focus on the overall inflation rate. But they can’t strip out food and energy from consumer price indices, as the U.S. Federal Reserve does, since these items account for so much of consumer budgets. This is why most of these central banks have been tightening their monetary policies.

(2)  The leader of the Black Swan flock in the food price inflation story this year may be La Niña. “The little girl” is causing havoc in the commodity markets. She is the strongest she has been in three decades and could continue to be disruptive for another three months at least, according to the latest closely watched report from the Australian Bureau of Meteorology released last week. The 1/6 Wall Street Journal reported: “Heat caused by the La Niña weather pattern, for example, is lowering forecasts for South American crops, and Russia banned wheat exports this summer due to a crippling drought. Severe flooding in Australia has crimped its raw sugar output by 20%.”

(3)  There are plenty of other Black Swans in La Niña’s flock. Some are stealth swans. They are the Unknown Unknowns, and Yardeni says he won’t pretend that he can see them coming. Plenty to choose from here Home prices could drop again in the U.S., as foreclosures are estimated to hit 1.2 million, surpassing last year's record high. Europe’s sovereign debt crisis could spin out of control as Spain gets in trouble--Spain's GDP is double the size of the economies of Ireland, Greece and Portugal combined. The Middle East could explode.  California could get locked out of the muni bond market if Governor Jerry Brown fails to deliver on promised cuts, causing chaos in the muni bond market, already on the verge of a nervous breakdown. Political gridlock could close down the federal government.

In the interim, having a field day in an ensuing market plunge would be the short sellers, who are like lizards, they eat what's in front of them, as one pundit put it. 

But Yardeni is optimistic for the rest of the year. He concludes: “Nevertheless, I expect that 2011 will be more like 2010 than like 2008. The biggest surprise this year would be '1500 for the 500.' Can you imagine the S&P 500 rising back to its all-time record high, or surpassing it by the end of the year? I can.”