Traders on the floor of the New York Stock Exchange swapped stories all week about the extreme trading conditions they witnessed — conditions that have not been this wild since the financial crisis in 2008.
For Virtu's Matt Cheslock, it was the stunning move in bond yields: "As an equity trader, seeing over 10 basis point daily moves in the yield at these all-time extreme lows is astounding. The flight from equities to bonds even at these low yields was staggering."
For Stuart Frankel's Steve Grasso, who is also a CNBC contributor, it was the amazing moves in a stock he had been trading — Avis Budget. "Avis popped to $50 off of really good earnings after the close on February 19th. I came back from vacation this Monday, and over the next few days it went to $31," he said. That's a drop of 40 percent in a little more than a week.
Many traders are trying to figure out where the bottom is. Traditional signs of capitulation — extreme oversold conditions (RSI), new lows at the NYSE (nearly 1,000), high put/call ratio, extreme readings in the VIX, junk bond outflows — are all flashing "buy" signals.
But traders are not sure they should act. Peter Tuchman from Quattro Securities tells me, "This has all happened over seven trading days. We were at record highs a week ago, but we now have the fastest sell-off in history. In a normal setting, this is a screaming buy. But there is so much we don't know about this virus, I'm not sure these traditional indicators are reliable when dealing with something like this."
Margin calls are another issue and they are notoriously difficult to quantify. But sell-offs midday over the last two days have Tuchman convinced margin calls are part of the decline, particularly Friday's sharp drop in gold. Tuchman said it was likely used to satisfy some of those margin calls.
At the moment, Tuchman said, fear and anxiety "are more powerful than the hope that this is over."
One big worry for traders: This may not be a problem that can be solved just by fiscal stimulus and central bank rate cuts. Fed Chair Jerome Powell briefly rallied the market at 2:30 ET Friday, noting that U.S. fundamentals are strong, and that while coronavirus poses an evolving risk, "We will use our tools and act as appropriate to support the economy."
That was good for a brief 30-point rally in the S&P 500.
"The Fed can do all the cutting in the world, but unless there is a vaccine or the infections start rolling over, you still cannot escape the headline risk of the coronavirus," Grasso told me from the floor.