When Bears Turn Bullish - Look Out Above!

For the second time this week we have a notable bear turning less bearish. On Monday it was noted bearish financial analysts Meredith Whitney, who upgraded Goldman Sachs (NYSE: GS) to 'Buy' one day prior to the company's much anticipated earnings report. Meredith also made some positive comments on Bank of America (NYSE: BAC). Today, bearish economist Nouriel Roubini, known as "Dr. Doom", made some "not-so-bearish" comments, saying the "worst is behind us in terms of the economic and financial conditions". Roubini called deflation the largest near-term risk, noting that he sees inflation becoming an issue in the "medium-term" unless the government adjusts its policies soon.

The markets are reacting positively to this one-two punch of neutered bears.

While strong earnings from Goldman Sachs, Intel (Nasdaq: INTC) and JP Morgan (NYSE: JPM) has given bulls something fundamental to hang onto, there is no doubt that these less-bearish comments from the notable bears created the catalyst.

So far this week, the S&P 500 is up a whopping 7%!

UPDATE: 5:30PM ET: After the close, Mr. Roubini is making more headlines saying his comments today were taken out of context and that while he expects the economy to bottom soon, the recovery will not happen this year and will be a below trend recovery.

Whatever Mr. Roubini. It's about your tone sir. When you talk recovery and not doomsday it will be interpreted more positive, which we assume is your intention. You can't have it both ways.

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