All the traders are wondering about the cause of increased volatility with which the DOW moves up and down... Here is my thinking... A lot of hedge funds have the high yield paper and some of it involves mortgage backed securities of subprime variety. Also, some funds have derivatives that are complex and hence not understood well. Other hedge funds use black box trading tools that have been yielding good returns for past few quarters or years. They have traded volatility by selling calls and puts against SPY and QQQQ. A lot of people have complained about lack of volatility. But, due to lack of bids for this so called subprime paper, the various strategies went topsy turvey. This resulted in mismatches in hedging schemes. And the hedge funds try to sell their marketable securities like DOW 30 stocks, gold stocks and other higher quality papers, to avoid margin calls etc. And, the whole trading scene has been disrupted. And some of the leveraged/hedge funds, are getting more and more unbalanced. Some are being closed. Feds purchase has and will provide liquidity to this subprime paper and hopefully FED is buying these for less that 50 cents to a dollar. Would appreciate feedback on these thoughts...