Bernanke's Loose Lips Fail To Sink Market Ships

After a big up day like we saw on turnaround Tuesday this week, it's impressive that prices were able hold the highs yesterday and even to eke out a small gain. This is especially true given the fact that Fed Chair Bernanke and his loose lip policy decided to roil the markets with talk of recession. It's a real head-scratcher why this man would aggressively slash rates every time the market hiccups and then turns around and offers up a reason to sell. Perhaps he should be called schizophrenic Ben instead of Helicopter Ben? But, in the words of Malcolm X, I digress.

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The market turned 180 degrees yesterday and as such, the recommended position flipped to long. Over the past few days we have argued that it was too late to add new short positions and to protect last Friday's lows with stop losses. Indeed, this should have protected everyone from a loss, thus we were accurate in assessing that risk was manageable on the short side.

With the strong reversal that not only took out Friday's highs, but which blew through the 50-day average on strong volume, long side risk is now quite manageable with stops to be kept below Monday's lows.

*$135.00-$135.50 look like important levels for bulls to protect moving forward. If these levels break down, we would likely have to consider this upside move a failure.