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If you would have looked at the markets midday, you would have concluded that this was one ugly day. The major indexes were plunging to new lows, and taking out the levels hit last Monday (3/5).

But then, seemingly out of nowhere, the markets put in a bottom and starting moving higher. It likely started with short covering. Rumors that Goldman and Bear were looking to buy a subprime lender got that group moving much higher. And then it start to turn into a full fledged rally.

From its low to high, the DOW put in a roughly 200 point intraday swing. Volume rose on both exchanges, making for a nice accumulation day. If past is prologue, usually these key reversal days have some legs to them. I covered my shorts to see how high this bounce can take us.

The CBOE put/call ratio hit 1.88 today, as high a reading as I can remember in recent years. That pushed the 10-day moving average to a new record high (going back to 1995). And the VIX topped out after reaching 21.25, a full 50% spike in just 2 days. But it closed much lower at 17.27. So maybe we've seen a near-term spike in bearishness.

Today certainly was exciting. But we're only past hump day, so rest up, and let's hit it hard in the morning.

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