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SEEKING ALPHA‘s The Heisenberg writes:
The Dow fell into a bear market (at least intraday) on Wednesday, another session that found the benchmark down more than a 1,000 points.
This “yo-yo” price action is not as inexplicable as it seems, and regular readers are acutely aware of the dynamics that are exacerbating things.
And yet, considering the circumstances (which are, in a word, extraordinary), I wanted to pen another “guide for the perplexed.”
“What the hell is goin’ on?,” my accountant half-shrieked, when I called him on Wednesday morning to make sure he’d filed my corporate return.
Norbert (not his real name, but close) is a lot like the rest of you: Flabbergasted by the sheer scope of the daily gyrations in US equities.
But, as regular readers are acutely aware, these “yo-yo” swings (as it were) are not wholly inexplicable.
Obviously, the coronavirus scare is the proximate cause of the market’s consternation, but the stage was set for this kind of wild price action once we lost the vaunted “gamma pin” after options expiry last month.
It was at that point that stocks were “unshackled.”
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