I noticed two bright arcs near the moon when I walked the dog the night of October 26th, 2004. The upper arc was brighter, and the colors were easy to see. The other arc, which appeared to come straight out of the moon, was really there- it's not a camera artifact. It was fainter than the upper one. There were high, thin cirrus clouds in the sky at the time.

The upper arc is part of the 22 degree halo, a rainbow-like halo caused by light refracting through ice crystals in the air. The lower arc is part of a parhelic (parlunic?) circle, which is caused by light reflecting off of the faces of ice crystals.

The picture looks best in a dark room, so turn your office or desk light off to see this better.