Nailed it!! Here’s a link that confirms your explanation. Thanks!!
It was a massive rally, and one that came out of nowhere. And it’s left market observers like yours truly wondering what the heck just happened. There wasn’t any new data, no headline-making speeches, no event that occurred just after the open to spur such a move. It literally came out of nowhere—and left us grasping for possible reasons. “Today’s market reversal was a head-scratcher,” writes Oanda’s Edward Moya. And he’s not wrong.
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The most likely explanation is a technical one. The S&P 500, at its low, had retraced half the gain it had made from the Covid low in 2020 to its peak in January 2022. That’s an important level for market technicians, and when it was hit, it appeared to set off a wave of profit-taking in put options that had become profitable, according to Bloomberg, which translated into actual buying, especially as those who were short the market got squeezed. And the rest, as they say, is history.
It’s an unsatisfying reason, especially in the midst of a bear market, and everyone looking for a narrative that could help reverse the painful losses. But sometimes markets move more because of positioning and trading, not for any fundamental reason.
Sometimes, even a 3% gain is just noise.
'38Packard