An indication that rates may rise....

Today, Ben Bernanke publically announced that the FED may raise the discount rate in the US "before long," but repeated the Federal Open Market Committee statement that low rates are warranted "for an extended period."

How ambiguous is that?! What ever the reason behind the announcement, the fact is that this is bad news for equities and furthermore adds more uncertainty to the current market climate. Higher rates are likely to encourage people to put money in savings which means less spending (lower consumption) and consequently, lower profits and less incentive to invest (why invest in risky stocks if you can get the same returns in a "safer" savings account). The S&P fell sharpy on the news.

This is good news for my net short portfolio. This morning the ESH0 (S&P March Future) rallied up to 1,072 on the back of news out of Germany and the EU suggesting that they would support a possible bail out. On the back of this, I added to my shorts at resistance, getting in at 1,070.5. This gave the portfolio heavy exposure to the downside (3 short S&P positions open), so I closed the short opened yesterday at a small 1pt profit on the diagonal support @ 1,065 (since been broken). I also took the opportunity to close the BP long position (short hedge) which is likely to be impacted by the possibility of falling oil prices should the fall in equities continue.