Hi Pic!

I read somewhere that about 70% of trading on the DOW is now automated, ie. funds have computer programs that just execute trading in real time based on parameters. Now if that number is true, then some of those programs went off the rails today for sure and I have to believe there are some huge stresses behind the scenes. A move of that magnitude involves trillions of dollars in swings in stock values.

You just do not get that kind of reaction that quickly except by a computer driven trade, and if so then perhaps some funds were wiped out in the whipsaw. Not to mention stop loss orders that were executed. I suspect a lot of people got hurt very quickly.

As for gold, some of that money is finding its way into a real safe haven. The spike in the dollar is probably driven by the same computer trading programs since there is a direct correlation between the DOW trading lower and the dollar trading higher. This is the first time I have ever observed the dollar trade higher so quickly, accompanied by a huge move up in gold. The metal has definitely decoupled, at least on a short term basis.

A final note is that so far the 2% rule on gold rising has been broken. Last I saw gold was up about 2.4% on the day and the breakout above $1200 should attract more technical buying. On the other hand I think the Cartel price managers are doing all they can to try and cap the metal, but this flood may be too big to contain today. And how many new shorts were trapped on this move?

cheers!

mike