Kitty called out a warning, 'Watch out!' Kitty called out a warning, "Watch out!"

Bozo thought, 'What's going on here?'  Bozo thought, "What's going on here?"

When the quoting clause precedes the quotation, the quoting clause ends with a comma or (less commonly) with a colon:

Granny asked, "Can you get into this bottle?"

Granny thought: "How did that ghost get in here?"

No matter whether you use a comma or a colon, the first word of the quotation is always written with an initial capital letter.

When the quotation precedes the quoting clause, it is the quotation which ends with a comma:

"These children are sleepy today," Miss Lee thought.

However, if the quotation itself ends with a question mark or an exclamation mark, then no comma is necessary:

"How's this, then?" said the ghost, and quickly slipped into the bottle. "Very good!" said Granny, putting a cork into the mouth of the bottle.

For information about some of the problems that students have with punctuating direct speech, click here: