Yo-yo is investor slang for an extremely volatile market. Like the namesake toy, prices in a yo-yo market can move up and down in quick succession repeatedly, often reaching extreme highs and extreme lows. Yo-yos take on features of both up and down markets, making them hard for investors employing a buy and hold strategy. A yo-yo market can be profitable, however, for skilled short-term traders that are able to recognized buy and sell points. Yo-yo markets usually involve major stocks moving in unison, and are thus sometimes referred to as “all or nothing” activity, meaning the market is either all good or all bad.
Yo-yo markets tend to be rare and short, usually lasting a few hours and rarely lasting more than a few days. When they do occur, it is often after a steady rise in stock prices over a protracted period. Such was the case in August 2015 when a yo-yo market lasting over a week caused the DJIA experienced both its high and low for the year on two successive trading days.
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