Read lines from a text file, reverse and save in a new text file

You can do something like:

with open('test.txt') as f,  open('output.txt', 'w') as fout:
    fout.writelines(reversed(f.readlines()))

read() returns the whole file in a single string. That's why when you reverse it, it reverses the lines themselves too, not just their order. You want to reverse only the order of lines, you need to use readlines() to get a list of them (as a first approximation, it is equivalent to s = f.read().split('\n')):

s = f.readlines()
...
f.writelines(s[::-1])
# or f.writelines(reversed(s))

f = open("text.txt", "rb")
s = f.readlines()
f.close()
f = open("newtext.txt", "wb")
s.reverse()
for item in s:
  print>>f, item
f.close()