Another morning wakeup call – “feet on the floor”, as my Dad would say. It’s time to deal with some more market volatility.

At 1260, the S&P 500 has picked up a sharp +4.9% from its intraday low of 1201 on Tuesday, and is making its bid to close up for the first week in the last seven. This morning we have to deal with what I dare say is an improving macro picture, but a deteriorating micro one. Earnings season is in full swing – Google and Microsoft are trading down -7% respectively, pre market open. It’s time for some old school trading.

Actually one of my partners from my prior days in the hedge fund business called it that this week – “old school” – and it’s appropriate. He manages billions in long/short assets now, and he is up double digits year to date. He knows how to trade, and he definitely knows how to manage risk in a down tape. If you can combine those go to market strategies with some bottoms up stock picking, you’re going to get paid this year. There are plenty of stock specific alpha bits to chew on in and out of their respective earnings releases. An old school market of stocks is emerging from a stock market.

On the Global Macro front, I simply have to call the cards as they lay. My thesis that raising rates here in the US will fix a lot of what troubles the collective wisdom of the crowd is playing out this week. Bernanke has finally admitted to the US stagflation problem, reported Asian economic growth has slowed, and the implication of near term Fed rate hikes has pushed both short and long rates up. This has crushed US bonds and stabilized the US Dollar.

This 3 day “Macro” move should be understood as a “Trade”, however. We still have a lot of hay to bail before we can open up the barns doors that we had Sally lock down, and call this a fundamental “Trend.”

For a macro “Trend” to manifest, I need to see some follow through in Bernanke’s ostensibly changed rhetoric – following through like leaders do, putting some action behind his words. I think he can raise rates by 75-100 basis points and nothing changes in terms of how Main Street America wakes up in the morning. This will help stabilize what continues to look like a pending US Dollar crisis, crush short term commodity inflation, and washout the remaining business models in this country who depend on free money leverage to earn fabricated returns.

If the US Dollar Index can close above $72.61, the CRB Commodities Index break down through the 427.96 line, and Oil close under $125/barrel, we have ourselves the right cocktail to head into our summer weekends.

For now, we’re going to head into this weekend with oil finding it’s Middle Eastern geopolitical risk bid, and the “Bear” market winning the benefit of the doubt.

Yesterday’s resistance level in the S&P 500 now becomes my support. If we break down today, and close below 1245, we could see an expeditious 30 point decline in the index.

Mr. Bernanke, the timing is perfect to draw an old school line in the sand!

Have a great weekend.