Federal Reserve Chairman Ben Bernanke finishes his two day testimony in front of Congress and the one question I liked to see asked is: would you still consider QE2 a success if the equity markets were down 10% since you signaled your intent to purchase assets in August, 2010 as opposed to being up 30%?

I think we know what the answer would be?

Gold is at a new high. If stocks were at new highs, commentators and analysts would be drawing all sorts of rosy conclusions about the future. With gold making new highs, you have to be suspect that something is wrong. Period. With little economic value, gold is the ultimate hedge. It is a hedge against a falling currency; it is a hedge against uncertainty; and it is a hedge against inflation. You don't see people buying gold because times are good (unless of course you are buying jewelry). Equity bulls should be worried with gold at new highs, but they will do whatever they can to rationalize this fact away.

POMO? Where are you?

If asset purchases continue for another three months and the equity markets drop 10%, what does that say about investors' beliefs as to why the market went ballistic from August to February? Once again, perceptions and psychology rule the day.

I don't quite understand the faith that people put in Ben Bernanke. I am sure his intentions are well meaning, but his track record of getting it right is a little less than suspect. He seems to get a lot "get out of jail free" cards.

Cut the budget by $64 billion and take a hit to GDP now or dig ourselves a bigger hole to climb out of later? For me, the answer is easy to see -- implement a plan now and take care of your problems now. It will be easier to do now than later. But folks have a difficult time seeing that. I am not sure why.

Spiking oil is usually how equity bull markets end. It was only a matter of time before all that Fed created liquidity found its way into the oil markets, and the unrest in the Middle East is the spark to light the fire.

4 out of the past 6 trading days have been distribution days for the SP500. I guess these sellers didn't get the memo that the equity markets only go up!