It was going to be a busy trading session Wednesday, with a heavy economic calendar and a Federal Reserve policy announcement all coming ahead of a European Central Bank announcement Thursday.

But that doesn't explain the wild swings in both directions seen in many stocks early Wednesday morning.

Stocks like Dole Food (DOLE) and China Cord Blood (CO) surged on no news, while gold, silver and related mining stocks were getting hammered. Kinross Gold (KGC) was down more than 10% at one point. The problem, it seems, is related a malfunctioning computer trading algorithm.

The story is still developing, but the problem seems to be at market maker Knight Capital (KCG), which has told clients to reroute trades to other brokerages because of a delay in order processing. Order handling and execution of nonlisted securities, smaller over-the-counter issues, seem unaffected.

Rumors are floating that Knight has a problem with one of its algorithmic computer trading systems.

Single stocks' circuit breakers, which are meant to limit volatility and avoid a repeat of the 2010 flash crash, are triggering. China Cord Blood, Kronos Worldwide (KRO), Corelogic (CLGX), Molycorp (MCP), and Trinity Industries (TRN) are among those trading halts.

Knight Capital said it's "looking into stock swings" while NYSE officials are fingering trades coming out of Knight as being responsible for the market breakdown. With trading volumes collapsing as retail traders keep abandoning stocks -- nearly $12 billion was pulled out of U.S. equity funds last week, the most in two years -- today's price swings are being magnified. 

But it's exactly these kinds of shenanigans that are pushing regular people away from the market in the first place.  What a mess. I'll update this story as information develops. 

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