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Why the wild market reversal

Market mayhem produces 'strange victory': Pro

Stocks erased huge intraday losses with buyers jumping into momentum and other downtrodden names.

"We reached exhaustion at the very same time we recaptured 1,820 (on the ). At 1:20, you saw some some exhaustion of sellers and you got an intraday bounce. The buying showed up in the Russell and the momentum names, " said Art Hogan, market strategist at Wunderlich Securities.

The Russell 2000, which has been in bear market territory, was the first major U.S. index to turn positive, followed by the Nasdaq, temporarily positive, as buyers nibbled on tech and biotech. The iShares Nasdaq Biotech ETF was up 3.5 percent.

The Dow was down about 200 points in late trading, but well off its lows of the day, and the S&P 500 was also lower.

"It's intraday volatility for sure, but it's a good sign. Today felt as close to capitulation as you can get," said Hogan. "To have it reverse itself, it's very strong sign technically."

The S&P 500 fell through the key 1,867 level for a third day, its 2015 low. But the technical damage accelerated when it slid below 1,820, its 2014 low. Traders have been watching that level, and technicians see it as a key support point that would give way to a drop into the 1,700s if broken.