Stocks Reverse From Early Lows; Nasdaq Gains

This morning I wrote that the put/call ratios were again very high, and that likel yesterday, they could come into play. A friend IM'd me with about 2 hours to go and chuckled at that call. But then, lo and behold, the market bottomed and rallied into the close.

It was a pretty surprising turnaround, triggered by rumors that the Ambac (ABK) deal could be close again, and also comments from CSCO CEO John Chambers who raised his long-term growth outlook for the company.

That sparked a short-covering rally that basically lasted into the close. The S&P 500 almost made it back to positive territory, losing -0.34% on the day. But the Nasdaq 100 rallied the most, and finished with a gain of +0.60%.

Amazon (AMZN) rallied 5% on comments out of a West Coast tech conference. AAPL also rallied today, after they said that the company will begin selling iPhones in both China and India this year. I had also hoped they would say something about a buyback, but for some reason they like sitting on billions of cash. Go figure.

Getting to the charts at the top of this post, one of the big themes for the day was the turnaround in the energy and commodity stocks. The charts above are of the oil ETF (USO) and the gold ETF (GLD), both of which had surprising down days after a prolonged runup.

This is completely normal, as traders with big gains look to lock-in some profits, and the extended rallies correct themselves. These stories likely still have room to run, and both oil and gold probably make good buys on a further pullback.

The Yen fell for the first time in 6 days. Let's hope that one continues. And the VIX was also down on the day, despite the elevated intraday volatility.

This market is so crazy that anything can happen on a given day, but the action of the last 2 days would lead me to believe that a bit more of a bounce is in order.

long AAPL, QQQQ