Turnaround Thursday

The market staged a nice turnaround today, after making a lower-low mid-day and then reversing higher into the close. I mentioned early on that I covered some of my ETF shorts in anticipation of a bounce. Better to be lucky than good, right?

The rally today was nice, although it did not come on an increase in volume. The put/call ratio ran well above 1.0 all day, so there was plenty of puts being purchased. I think this could result in some additional short covering before quarter-end.

Retail stocks led the market (+2.7%), with many of them putting in a large-range outside day (LROD). Housing stocks also were strong on the day, while energy stocks put in large downside reversals. This could signal a short-term top in the energy complex. When Rita got downgraded, oil closed down on the day, and profit taking kicked in, it was enough to cause the whole group to roll over. I know lots of investors were even placing new short bets in the group.

GOOG also made a new high today, before profit taking knocked it down by the close. The 10-year yield also finished slightly lower at 4.17%.