-Early 2009
The global financial system borders the edge of total lock up.
-March 2009
The Federal Reserve announces ~1.2T in quantitative easing (QE), the "printing money" to buy mortgage and US Treasury debt.
Program/algorithmic/high frequeny trading has been an ongoing component of modern markets, but combined with newfound QE money and fewer "real" investors, the large financial firms more easily push around the market, almost straight up for the past 10 months.
http://www.zerohedge.com/article/correlation-sp-500-performance-fed-monetization-activities-start-qe
Program trading has an average of ~25% the total NYSE volume and as high as 50%.
-Early 2010
With the US dollar again closer to all time lows, the Fed has been trying to wind down QE.
At this level, the Fed likely cannot extend QE without the risk of a US currency crisis.
Under political pressure, the President threatens to reign in the financial's proprietary trading activities, to reduce financial system risk, with a new/partial Glass-Steagall act.
However, the proprietary/program trading is the very thing largely keeping the market afloat.
The same week the Dow dumps 500 points as QE money has been drying up and the financial companies' trading activities are in danger of being shut down.
Almost immediately after the market damage, Obama backpedals and says bank regulators may be too tough.
There are also some rumors that proposed restrictions on prop trading already has loopholes, so the final effect is yet to be seen.
Either way, note again that despite the recent sell off, the market remains at relatively high levels on thin and falling volume.
This has been the one year machine driven rally, that less and less actual people believe in.
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