When will we know all is normal ? Stocks Close Volatile Session With Positive Reversal BY JONAH KERI INVESTOR'S BUSINESS DAILY Posted 8/1/2007 A late-day reversal hoisted stocks into the black Wednesday, with the Dow leading the way. Buoyed by a big reversal in the session's final minutes, the industrial average finished up 1.1%. The S&P 500 gained 0.7%, the NYSE composite 0.2%. The Nasdaq rose 0.3%. Nasdaq volume picked up compared with Tuesday's level, while NYSE volume eased. Wednesday's action continued the market's recent volatile trend. The Dow swung from positive to negative multiple times during the day before jumping back above break-even late in the day. That index ultimately bagged the biggest gain, as investors moved into blue chips. Top-rated stocks didn't benefit from bargain hunters' late surge. The IBD 100 picked up just 0.1%, which wouldn't be surprising if program trading was indeed behind the last-minute buying binge as some on the Street speculated. Meanwhile, the CBOE volatility index, or VIX, spiked briefly to 26.22, its highest level since April 2003. The put-call ratio, which measures the amount of bearish puts vs. bullish calls bought by options traders, hit 1.26. Both the VIX and put-call are contrarian indicators. When they reach extreme levels they can sometimes foreshadow a market turn. However, the VIX still has a ways to go before hitting the levels above 45 that coincided with other market bottoms. Still, such sentiment indicators should only be used as secondary gauges of the market's condition. The price and volume action of the major indexes and the action of leading stocks tell us a lot more. Based on those standards, the market has struggled lately. The indexes have breached key support levels such as their 50-day moving averages. Multiple down days in elevated volume have dragged the market lower. A number of top-rated stocks have also suffered some damage. Earnings reports have proven especially treacherous. Companies that have missed their targets have seen big price drops in huge volume. A pair of restaurant chains offered a tale of two stocks Wednesday. After Tuesday's close, Chipotle Mexican Grill (CMG) and Buffalo Wild Wings (BWLD) both released quarterly earnings reports. Chipotle beat profit views, while Buffalo Wild Wings met profit expectations but missed revenue estimates. Chipotle vaulted 10.85, or 12%, to 99.19 on more than four times its normal trade. Buffalo Wild Wings plunged 7.33, or 17%, to 35.89 in huge turnover. That divergent action should remind investors of the dangers of holding a stock through an earnings report. In a volatile market such as this one, an earnings miss can leave carnage in its wake. September crude dropped $1.68 to $76.53 a barrel, though it reached a record high of $78.77 intraday.