Lehman Brothers (LEH | Quote | Chart | News | PowerRating) decides to boldly raise capital, putting the short sellers on the run to begin a much-anticipated, follow-through-to-the-upside week in stocks.

On Monday, traders and investors were praising Lehman Brothers' courageous move to raise $3 billion capital though a preferred stock sale. The move was widely believed to be geared toward soothing nervous investors who had begun to fear that, after the implosion of Bear Stearns (BSC | Quote | Chart | News | PowerRating), the venerable Lehman Brothers might be next.

The market, for its part, couldn't have appreciated the move more, as stocks were higher on Monday, and exploded to the upside on Tuesday in what was the 8th biggest, single session point gain ever in the history of the Dow industrials. It was also on Tuesday that Lehman Brothers announced that it was upping the size of its stock sale to $4 billion.

Unfortunately in Washington where, as Democratic presidential hopeful Barack Obama has suggested, "good ideas go to die," lawmakers were more interested in ferreting out the Federal Reserve Board's role in helping struggling Wall Street financiers like Bear Stearns than in patting the likes of Lehman Brothers on the back.

Remember that the deal that called for JP Morgan (JPM | Quote | Chart | News | PowerRating) to salvage the listing Bear Stearns for $2 then $10 per share had a heavy dose of intervention and assistance from both the Federal Reserve and the U.S. Treasury. Thus, Federal Reserve Board chairman Ben Bernanke and others were hauled before the Senate Banking Committee to listen to, err, testify before Senators who were decidedly skeptical that the Fed's new role as lender of last resort to investment bankers was a good idea, let alone a Constitutional one.

Bernanke admitted that the Fed's role in the Bear Stearns deal amounted to a bail-out. But warned lawmakers that the failure of the Fed to act would have led to potentially disastrous consequences not just to Wall Street, but also to the "real economy" as well, including home mortgage and credit markets that are already on the ropes.

Was Ben Bernanke able to do for the senators of the banking committee what Lehman Brothers, apparently, did for stock investors? It is the height of political season, it should be remembered, and perhaps even the lawmakers of Washington can be forgiven for a little political posturing in a time of rising gas prices and falling home values.

At least as long as they leave it as posturing, that is. Treasury Secretary Paulson - no stranger to Wall Street - issued recommendations for sweeping regulatory reform this week. Paulson's plan calls for, among other changes, allowing the Federal Reserve Board to have greater control over private financial institutions such as investment banks. This too was part of the Congressional conversation this week as senators wondered aloud, as they are wont to do, whether or not Paulson's plan went too far in expanding the Fed's role in the financial economy as well as whether or not Paulson's plan did not go far enough to help "the little people"--from Bear Stearns employees likely to lose their jobs to the average American wage-earner and homeowner for whom a summer rebate check is likely to be the closest thing to a bailout they are likely to see.

Torn Between Two Trendlines

I can't help but make a brief technical note following up on last week's Weekly Outlook, "Is the S&P 500 Serving Turtle Soup?"

So far, investors seem to be getting quite belly - full of the Turtle Soup the market is serving up. Traders who have been trying to fade the big move higher on Turnaround Tuesday have been forced to cover - or at least hedge - their short positions as the markets bucked off some negative jobs news early on Friday to move higher over the balance of the trading day.

Right now, the S&P 500 has broken out beyond one key trendline from the December highs. But the longer downtrend line from the beginning of the correction in October remains to be challenged. From a technical standpoint, it would probably be more bullish if the market did some back and filling in the area between these two downtrend lines.

Such price action would provide time for buyers and sellers to realign themselves and prepare for the market's next move - which would likely be higher even though some resistance should be expected near the Dow 12,800 or S&P 500 1,400 levels. Generally speaking, as I've said for years writing about technical analysis, consolidations in trends tend to lead to more trend.

If however the market rockets higher, breaking out not just beyond the December-to-present trendline, but beyond the October-to-present down trendline as well, then the markets could be in for some trouble. We are already seeing a tremendous number of overbought stocks in our screens. If the markets are to move meaningfully and sustainably higher, then those overbought conditions will have to be worked off. Otherwise, every tick higher will bring these stocks - and the market - that much closer to the sort of overbought extreme that our research reminds us leads often to underperformance, if not outright reversal.

Stocks in the News

Headlines this week included some rare good news from the technology/gadget area - including the sector's top retailer - as well as bold moves from Lehman Brothers and continued glad tidings from commodity - related stocks.

Research in Motion (RIMM | Quote | Chart | News | PowerRating) announced earnings that had nearly doubled as the company beat analyst estimates by two cents this week.

More good news from commodity stocks arrived this week as Monsanto (MON | Quote | Chart | News | PowerRating) reported second quarter earnings that were up more than 80%.

Best Buy (BBY | Quote | Chart | News | PowerRating) saw its profits decline for the fourth quarter. But insofar as the decline was not as bad as expected, traders bid the stock's shares higher mid-week.

Lehman Brothers (LEH | Quote | Chart | News | PowerRating) announced early in the week that it would raise capital through a $3 billion stock offering.

UBS (UBS | Quote | Chart | News | PowerRating) reported a $12 billion loss due to writedowns of approximately $19 billion. Deutsche Bank (DB | Quote | Chart | News | PowerRating) added to the negative news with a writedown announcement of its own to the tune of $3.9 billion.

Altria Group (MO | Quote | Chart | News | PowerRating) announced this week that it was spinning off its Philip Morris International division. The new company will bump Allegheny Technologies (ATI | Quote | Chart | News | PowerRating) from the S&P 100 and knock Circuit City (CC | Quote | Chart | News | PowerRating) out of the S&P 500.

What To Look For Next Week

Monday: Consumer Credit
Tuesday: FOMC Minutes / Pending Home Sales Index
Wednesday: Wholesale Trade
Thursday: Chain Store Sales / Jobless Claims / ECB, BOE Announcements
Friday: Import, Export Prices / Consumer Sentiment

Best Performing Stocks (PR 8-10) of the Last Five Days

Here are some of the best performing, high Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 9 or 10.

Sara Lee Corporation (SLE | Quote | Chart | News | PowerRating). Long Term PowerRatings 10
Centerpoint Energy Inc. (CNP | Quote | Chart | News | PowerRating). Long Term PowerRatings 10
Meredith Corporation (MDP | Quote | Chart | News | PowerRating). Long Term PowerRatings 9
Fortune Brands (FO | Quote | Chart | News | PowerRating). Long Term PowerRatings 9
Allied Waste Industries (AW | Quote | Chart | News | PowerRating). Long Term PowerRatings 9

Worst Performing Stocks (PR 1-3) of the Last Five Days

Here are some of the worst performing, low Long Term PowerRatings stocks of the past five days. This week, all of the listed stocks have PowerRatings of 1 or 2.

First Fed Financial Corporation (FED | Quote | Chart | News | PowerRating). Long Term PowerRatings 2
First Horizon National (FHN | Quote | Chart | News | PowerRating). Long Term PowerRatings 2
Jos A Bank Clothiers (JOSB | Quote | Chart | News | PowerRating). Long Term PowerRatings 2
Usana Health Science Inc. (USNA | Quote | Chart | News | PowerRating). Long Term PowerRatings 2
Dryships (DRYS | Quote | Chart | News | PowerRating). Long Term PowerRatings 1

David Penn is Senior Editor for PowerRatings.net.