The markets were down and dirty in the morning to new pullback lows, reaching as low as 1606 on the NDX and 1133 1/2 on the S&P 500, but staged a monster rally in the last hour and exploded for big gains at the close.

The Dow moved up more than 600 points off the low just before the close from 10,459 to over 11,076, closing up 410 on the day. The S&P 500 jumped from 1133 1/2 to 1211, closing at 1206.51, up more than 50, and the NDX jumped from 1606 to 1704, almost 100 points, closing at 1697 and change, up 65 on the day. The Philadelphia Semiconductor Index (SOXX) exploded for 4 1/2%, up 15.57.

It was a broad rally, as the advance-declines were 3 to 1 positive on New York and a similar amount on Nasdaq. However, up/down volume was where the story was, with a ratio of better than 8 to 1 on New York on total volume of more than 2.4 billion. Nasdaq traded 3 3/4 billion, one of the largest days ever, and had a ratio of nearly 10 to 1 positive on advancing over declining volume.

That's certainly the kind of volume you want to see on a major reversal. With all the indicators screaming for a rally from oscillators to the VIX, which reached over 40 today, and with cycle lows coming in this timeframe, the rally wasn't a surprise to us, in fact we were expecting one.

There were many multiple point gainers on our board. Leading the way was Focus Media (FMCN), which jumped 4.58 on 9 million shares, closing at 26.83. Sigma Designs (SIGM) had a superior day today, up 2.95 at 17.15, the high for the day going away, on nearly 2 million shares, as it has nearly 40% of its stock short, and new anti short legislation was announced today. Also in that realm, China Architectural (CAEI) jumped 1.32 to 7.75, as more than 100% of its float is short, and Emcore (EMKR) jumped 1.35 to 6.48 on 3.8 million shares, a heavily shorted situation there ,as well.

Other stocks of note, Clean Energy (CLNE) was up 1.82 to 15.34, Canadian Solar (CSIQ) up 1.73 to 24.94, AgFeed Industries (FEED) 1.29 to 10.10, and Solarfun (SOLF) 1.03 to 14.00.

The US Oil ETF (USO) jumped 1.74 and the Q's 1.36. As you would imagine the short instruments got hammered today. The SDS lost 5.32, the QID 3.84, and the DUG 2.03.

Goldman Sachs (GS) lost 6.50, but closed way off the low. It got under 86 earlier in the session, but rallied to close at 108. MS as well closed up only 80 cents on the day but more than 10 points off its earlier low on 317 million shares today.

So some exciting big reversals today. One, in particular, State Street Bank & Trust (STT), got hammered from 69 down to 29 at one point, rallied back up to 59, where it closed, down 5.79 but 30 points off its low, an amazing session there.

Washington Mutual (WM) had a big day, up 98 cents to 2.99, nearly 50% in one day on 190 million shares.

Stepping back and reviewing the hourly chart patterns, the significance of today's action was that the indices plunged to new lows, reversed, consolidated, and then came on strong in the last hour, other than the last 10-minute pullback, to close near the highs for the day.

Our next target, and overhead resistance to keep an eye on, is the 1710 area on the Nasdaq 100. That was yesterday's gap after the breakdown. On the S&P 500 the level to watch is the 1211-13 zone.

Today was a very promising reversal and had the tools of an important low being put in. We'll see if we can get an extension tomorrow, which is options expiration day, where anything can happen.

Harry Boxer is a technical consultant to many Wall Street hedge funds and large institutional traders, and author of TheTechTrader.com, a real-time diary of his day, swing and intermediate-term trades. For more of Harry Boxer, sign up for a free 15-day trial to his Real-Time Technical Trading Diary, or sign up for a free 30-day trial to his Top Charts of the Week service.