An explanation for the recent crazy moves might be the lack of liquidity. When hedge funds are trying to get out of positions they are driving the market lower and vice versa. As an example look at Gap Stores, which is down over 8% today. They missed numbers but the stock already traded down hard in anticipation of the numbers. No matter, those who want liquidity in exchange for their Gap shares will pay a steep price today.
There was a time when hedge funds were a small group and were able to take advantage of slow moving mutual funds and retail investors. But now they are the big fish and are being slowly eaten by flash trading algorithms.